One of the most productive agreements for the rights holder and user is a commercial concession agreement. Cooperation, called "franchising", implies a legal relationship between the two parties. The article provides details regarding this contract.
general information
Under this agreement, the copyright holder transfers the right to use the brand in a particular territory. This tool promotes the brand in places where it does not work. The user has the opportunity to quickly make a profit. Starting a business, each startup has to face great difficulties in creating a brand in the market. It takes a lot of effort and time. But when using a promoted brand, this stage is solved on its own.
It will help to understand what a commercial concession agreement is, a sample document presented below. The essence of the document is that one party (the owner of the rights) must give the other side (user) for a certain period or without it the opportunity to apply in their activities the exclusive rights that belong to the holder for a fee. These include the exploitation mark, trademark, commercial designation, manufacturing secret (which is commonly called “know-how”) and so on.
The application of exclusive rights, as well as the reputation of the company and the commercial experience of the holder, is provided in the prescribed amount, indicating the minimum and maximum. In addition, the document may provide for a certain territory of use, or may not provide for it. What other information is contained in a commercial concession agreement?
A sample document contains a large amount of rights and obligations of the parties. The parties are both commercial organizations and individuals having the status of an individual entrepreneur.
The document is regulated by the seventh section of the Civil Code, which refers to a license agreement if it does not contradict chapter 54 of the Civil Code of the Russian Federation and the essence of this agreement.
Document form and registration
The contract must be in writing. An oral agreement is not legally binding.
State registration must be carried out with the full range of relevant rights provided for by the commercial concession agreement. Based on the model, a document is filled out and sent to the federal body authorized to deal with intellectual property. Only after registration is it considered valid.
Commercial subconcession
The agreement may provide for the possibility of the user allowing others to apply the set of exclusive rights received. Such legal relations are called subconcession. It may also contain the obligation of the user to provide the appropriate number of persons with the relevant rights on a subconcession basis for a trademark concession agreement.
A sample document is presented below. It cannot have a longer period of use than the concession agreement on the basis of which it is signed. The same rules apply to this document that apply to a concession agreement, if this does not contradict the essence of the subconcession.
Remuneration
The remuneration is transferred to the owner of the rights from the user in the form of periodic or one-time cash payments in the prescribed amount. In addition, certain amounts for revenue, extra charge for wholesale cost and in other forms specified in the contract are transferred.
Rights Responsibilities
The holder of the rights transfers to the user the necessary documentation of a technical and commercial nature, and also provides other information that is necessary for the second party to exercise the rights that contains the contract of commercial concession (franchising) concluded between the parties. A paper sample can be obtained from a lawyer. The document provides for a detailed briefing of the user on all the nuances related to the exercise of rights.
Unless otherwise provided by the provisions of the contract, the holder of the rights is obliged:
- Ensure state registration of the granting of the right to apply the corresponding rights under the contract in the user's activity This is stated in paragraph 2 of Art. 1028 Civil Code.
- Provide the user with advice and technical support on an ongoing basis. This includes assistance in training, as well as in improving the qualifications of employees.
- To control the quality of goods, works or services by the user on the basis of the relevant contract.
User Responsibilities
The list of user responsibilities is much wider. Given the nuances of a specific activity, the user must perform the following actions, which are provided for by a contract of commercial concession (franchising). An example of proper customer service is the fulfillment of all contract terms. The recipient needs:
- Ensure compliance with the quality of goods, works and services produced, performed or provided by the holder of rights.
- Follow the instructions and instructions of the holder, which are aimed at meeting the conditions for the application of exclusive rights. For example, about how to use the franchise, the design of premises inside and out, and so on.
- To provide buyers or customers with all the services that the rights holder provides directly.
- Do not disclose classified information ("know-how") of the holder of rights and other information that is confidential.
- Comply with the terms of the subconcession, if any, contains a specific commercial concession agreement for use.
- An example of the approximate fulfillment of user obligations is also to inform customers or buyers about the use of exclusive rights on the basis of the relevant agreement.
Limitation of rights of the parties
The contract may provide for certain rules restricting the rights of both parties. These include the following:
- The owner agrees not to grant the relevant rights in a certain territory, which is assigned to the user.
- The user agrees not to enter into competition with the holder of rights in the territory, which is provided for by the concluded contract of commercial concession of production. In the sample document, these nuances are necessarily reflected.
- The user undertakes to sell and resell goods (to do work or provide services) with the exclusive rights of their owner at set prices, and also not to use trademarks and other symbols of other owners.
- The user agrees to conduct his activities only in the territory provided for by the contract.
- The user undertakes to agree with the rights holder on the rental of certain commercial premises, including their design inside and out.
- The terms of the contract cannot provide for the location of a user who sells goods, does work or provides services, his own place of residence. Otherwise, the contract of commercial concession and legal is void. In the sample document, this item is indicated very often.
Owner Responsibility for User Requirements
The holder of the rights has subsidiary responsibility for the requirements regarding poor quality (of goods, services or works sold) that are presented to the user.This clause contains any model commercial concession agreement. The pattern of responsibility changes when it comes to manufacturing products. In this case, the holder of the rights is jointly and severally liable.
User preference and contract amendment
A user who performs all the duties assigned to him properly, after the expiration of the contract, receives a pre-emptive right to re-conclude. In this case, the terms of the contract may be changed by agreement of both parties.
If the holder of the rights in these circumstances did not provide the opportunity to sign a new relevant agreement, but within 12 months after the end of the contract with the user signed a similar document with another person, the user can go to court. In the statement of claim, he may demand compensation in connection with the fact that the refusal to renew the contract caused losses.
In accordance with Chapter 29 of the Civil Code of the Russian Federation, all amendments to the commercial concession agreement are introduced. A sample and example of the terms of the document are agreed by both parties. Then the contract is registered, in accordance with paragraph 2 of Art. 1028 of the Civil Code of the Russian Federation.
Termination of the contract
If the contract does not specify the validity period, then either of the parties may refuse it, having previously notified the other party. This must be done six months before the termination of activity, unless other conditions are provided for in the contract.
If the contract indicates the possibility of its termination by payment in the form of compensation, then any of the parties can also do this. In this case, the other party must be notified in writing of the decision no later than one month before the termination of activity.
The cases in which the holder of rights may refuse to fulfill the contract are the following:
- Violation of the conditions by the user.
- A gross violation of the instructions of the holder of rights ensuring compliance with the conditions, as well as the methods of applying the complex of rights provided for by the model of a commercial concession agreement.
- The royalties (or rewards) contained in the provisions of the contract are violated by the user. For example, royalties are not paid on time.
- The refusal of the owner of rights unilaterally is possible if the user has not eliminated the violation within the provided period. The same right arises in the event of a repeated similar violation within 1 year.
In order to terminate the contract ahead of schedule (with or without a deadline), it is necessary to record this fact in the registration authority. This is stated in paragraph 2 of Article 1028 of the Civil Code.
A commercial concession agreement is terminated if the rights to a trademark and other exclusive rights granted by their holder are terminated. The same finale will be in the event of one of the parties declaring bankrupt.
Persistent when changing sides
The exclusive right may be transferred to another person. This is not a reason to terminate or amend the contract of commercial concession (sample filled out is presented below). The new owner of the rights automatically becomes a party to this contract.
If the holder of the rights dies, then they are transferred to the heirs. However, for this, the heir must register in the tax quality of the individual entrepreneur. If this is not done, then after six months from the moment of opening the inheritance, the contract shall be terminated. Before the inheritance is accepted, the rights and obligations of the parties to the contract are exercised by the manager, who will be appointed by the notary.
Commercial designation changes: implications
If the holder of the rights changes the commercial designation, which is included in the provided complex in accordance with the concluded agreement, this document will continue to operate with the new commercial designation if the user does not want to terminate the contract and does not require compensation for the losses incurred.If the contract continues, the user may demand that the holder of the rights reduce the remuneration by a proportionate amount of the losses incurred.
Termination of exclusive right: consequences
If the validity of a certain exclusive right has expired, but the contract has not, the document will continue to be valid except for provisions relating to that right that is no longer in force. At the same time, the user can turn to the other side with a request to reduce the remuneration by the corresponding amount.
If the right to a trademark, service or commercial designation ceases, then there will be consequences that are indicated in paragraph 3 of Article 1037 and Article 1039 of the Civil Code.
Below is a completed sample commercial concession agreement.
Franchise and licensing agreement
If the license agreement provides for the transfer of one type of intellectual property, then the concession agreement is a complex. At the same time, the holder of rights has a greater number of tools for controlling the user. These include:
- Quality control of goods (services or works). Moreover, this is the responsibility of the holder of rights.
- The possibility of requiring the user to strictly abide by the instructions regarding the organization of service, the use of technology, the design of a retail space and others.
- Ability to set specific prices.
In addition, the contract may provide for conditions under which the user's rights with respect to signing similar contracts with the competitors of the holder of rights are limited.
Conclusion
A complex form and conditions are contained in a commercial concession agreement (franchising). The completed sample presented in the article illustrates this clearly. This document is a type of civil law contracts and contains the terms of all preparatory and implementation measures. It is imperative to study these points before making an appropriate decision.