Franchise Business

Trends in Russia which can be motivation to start Franchise business in Russia – Open a company

  1. Russian traditional marketing is starting to be replaced with digital marketing and influencers using the social networks to hype sale
  2. In Russia Z generation are not brand-loyal. They are fickle, surfing the internet, following social media recommendations that reflect fashions and opinion-makers, making a disproportionate number of purchases online.
  3. they’re easily led by graphics and generally avoid text. So they are steered by Tik Tok, Instagram, YouTube, Facebook. Thus content must be well-adapted for tablets and smartphones. Accordingly shops, restaurants and service providers able to communicate with consumers via mobile apps are winning the large share of customers. This Z generation of customers only visit high-street stores and malls to physically handle the goods. Then they actually buy from cheaper suppliers online.
  4. Multi-brand franchisees are on the rise because their strategy mostly follows new type of consumers demand in Russian market.
  5. Franchises in Russia which are most popular  are those requiring an initial investment of up two million rubles, Royalties, when requested, in general, do not exceed 5%. Either this or they are generally replaced by the obligation of minimum purchases pre-established in the contract.

    Foreign and local investors are allowed to create Franchise Business in Russia.

    Possible options are:
  1. setting up new business ventures;
  2. entering into franchise agreements;
  3. purchase an existing business or a shelf company through which they can start operating as soon as possible.

Franchise business legislation – Open a company

Franchises are primarily governed by the Russian Civil Code in which these types of ventures are known as concessions. Secondly, franchises are governed by the Commercial Code as a Russian or foreign entrepreneur must carry out the franchise business’ activities through a commercial entity.
Russia has several types of franchise business which can be set up:

  1. development franchise;
  2. direct or single -unite franchise;
  3. multi- unite franchises;
  4. joint venture franchises business.

In all Franchise business types concession agreement must be signed by the parties.

Registration of Franchise business in Russia – Open a company

  1. register the company;
  2. concession agreement must be signed from franchisor (company owner of brand) and the franchisee(company selling or distributing the goods or service of the brand)
  3. With Intellectual Property office of Russian the franchisee must make registration in order to be able to use name of franchisor

Most common legal problems with Franchise Business in Russia – Open a company

Most common problem is the lack of an appropriate legal framework in the field of commercial concession.
Possibility that one of the parties can terminate the agreement by simply notifying the counterparty six months before the termination of the contract.
The need to register a franchise agreement by the body that registered the right holder, which is the franchisor.
The preservation of the contract of commercial concession in effect in that case if one of the parties changes.

Our experts are ready to provide comprehensive support for foreign entrepreneurs and businesses, they will help you at all stages, from a preliminary assessment of the situation and choosing the best solution to obtaining all the necessary registration documents and getting started.

By seeking legal advice, you will receive the following guarantees: the result will be achieved within a certain period, and any issue will be resolved as quickly and efficiently as possible, and all this for reasonable money. Besides, you will protect yourself from possible risks and mistakes, which can turn out to negative consequences.

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