Franflash: New Franchise Registration Procedure in the Ukraine
04 January 2012
The Ukraine is one of the many Eastern European countries which
introduced franchise specific legislation in 2004 following the
example of Russia. However, the registration laws caused numerous
practical problems for franchisors due to the absence of a
registration procedure.
It is a requirement of Ukrainian Law that franchise agreements are
registered with the state authority which registered the
franchisor. For foreign franchisors, the franchise agreement has to
be registered by the authority which registered the
franchisee.
As such the provision seems reasonably straight forward, but so far
proved to be impossible to comply with. In practice, the state
authorities currently simply refuse to register franchise
agreements. This puts franchisors in a difficult situation as:
- the agreement does not come into force until registration has
taken place; and
- the parties are prevented from relying on the franchise
agreement vis-à-vis third parties unless the franchise agreement is
registered
Until now franchisors had to rely on case law which suggested
that for franchisors who tried to register, but were turned away by
the registration authorities, could not be held liable. The new law
envisages that in future the Ukrainian Intellectual Property Office
will register franchise agreements creating one central body for
all registrations. As the Ukrainian IPO is already accustomed to
the registration of trade mark licenses (which generally goes
smoothly) it is thought that franchise registration will soon be a
straight forward procedure.
In the meantime franchisors that have not been able to achieve
registration need to ensure that they keep on file the official
refusal letter to avoid challenges.
For more information on franchising in
the Ukraine or on the new draft law, please contact Mark
Abell, Babette Märzheuser
Wood or Chris
Wormald.