Franchise in Estonia
Concept of Franchise
Franchise is regulated in Estonia under Law of Obligations act. The act defines that franchise is a contract where one person undertakes to grant to another person a set of rights and information that belongs to the franchisor for use in the economic or professional activities. The contract includes right to trade mark, commercial identifications and know-how of the franchisor.
Monetary obligations of franchise
Usually monetary obligations are defined in the contract. The payment might be a lump sum paid once when concluding the contract or in yearly basis. There are no provisions regarding in which way the payment should be made.
Obligations of franchisor and franchisee
The franchisor is required to give all the instructions available for the exercise of the rights and provide permanent assistance to the franchisee. Also there are obligations for franchisee: it is required to use commercial identifications of the franchisor, to ensure the quality of goods manufactured or services provided by the franchisee pursuant to the contract is the same as those manufactured or provided by the franchisor, to follow the instructions of franchisor which are given to exercise in the same way as the franchisor and to provide all added services that they could expect to have from the franchisor.
Rights of franchisor and franchisee
The franchisor has the right to conclude the agreement with whom they wish to. Franchisor has also right to check the quality of the goods manufactured or services provided on the basis of franchise contract by the franchisee. Franchisee has right to gain from the brand name and from the client base of the firm.
Licence of the Intellectual Property Rights of the Franchise
With the licence agreement related franchise the franchisee also obtains for lease the intellectual property rights of the brand. The franchisee is obliged to use the IPR for intended purpose and in the integrity of the brand. Franchisor is obligated to provide all the brand material available for the use of franchisee in exchange of the franchise payment.
Tony Koivula, lawyer of the Gencs Valters Law Firm in Tallinn.
Practising in fields of Obligations Law in Latvia, Lithuania, Estonia.
T: +372 61 91 000
F: +372 61 91 007