Franchising Agreement

A set of exclusive rights for a fixed fee is provided under a franchise agreement by a complex licensor (franchiser) to a complex licensee (franchisee).

Pursuant to the Civil Code of the Republic of Kazakhstan, under franchising agreement it is mandatory to transfer a right to use a company name and commercial information and the possibility of transferring other exclusive rights.

In case of transfer of rights to a trademark or invention, utility model and industrial design these intellectual property objects must be registered in the Republic of Kazakhstan.

A franchise agreement applies to a specific field of activity.

The territory of use may either be limited to a specific area or may be unlimited. The franchising agreement can be concluded either for a fixed term or not limited in time.

Information about a set of exclusive rights transferred for use should be provided by franchiser to franchisee before entering into a franchise agreement.

A franchise agreement incorporating provisions related to granting the right to use patents or trademarks is subject to mandatory registration with an authorized body.

Fee under the franchising agreement paid by the franchisee to franchiser may be in form of:

  • fixed one-time or periodic payments (the most common is an initial payment of fixed amount immediately after the conclusion of the agreement, and then time deductions in a certain percentage of the amount of turnover of goods, services, works so called royalty payment);
  • deductions from income, margins on the wholesale price of goods transferred by the licenser for resale, or
  • in any other form.

Income from the sale of goods, remuneration (including fee under the franchise agreement), and royalty is subject to income tax (30%). In case of payment of royalty to companies and citizens of other countries on the basis of bilateral agreements of Kazakhstan with some countries on the avoidance of double taxation, the tax may not exceed 10%.

Presently in Kazakhstan there are more than 350 franchises, more than 3,000 franchised businesses have been opened, employing more than 25,000 people, and the turnover of the franchise sector reaches US $ 1 billion a year. The franchising sector in Kazakhstan is growing, currently more than 30 domestic companies have announced their own franchise offer.

Kazakhstan welcomed such world brands as World Class, Pizza Hut, BURGER KING, Gloria Jeans, Rosinter Restaurants Holding, ZARA, Rixos, Coca-Cola, Baskin Robbins, Adidas, Benetton and many others. At the same time, there are many low-budget franchises in the sphere of trade in consumer goods, services, crafts, media, Internet technologies. We can also observe new-generation franchises in Kazakhstan such as social and event franchises, for example, the Global Entrepreneurship Week. According to experts, now more than 200 foreign franchisers are actively searching partners in Kazakhstan and more than 5000 are ready to cooperate with domestic businesses.

We offer following services:

  • Preparation of draft agreements on the transfer of rights under a franchise agreement;
  • Preparation, filing and maintenance of an application to register a franchise agreement;
  • Legal advice on the transferred rights to IP objects under the agreement;
  • Preparation of memorandums, legal opinions on the compliance of agreements with the legislation of the Republic of Kazakhstan;
  • Assistance in the resolution of disputes under the assignment and licensing agreements in courts and pre-trial settlements.

In this section, information is published concerning the section Contracts and Agreements – Franchising Agreement

  • Assignment of rights under franchising agreements in Kazakhstan;
  • Assignment of rights under licensing agreements in Kazakhstan;
  • Some issues concerning legislation related to licensing agreements in Kazakhstan;
All publications

Saule Kulzhambekova

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Requests relating to section Contracts and Agreements – Franchising Agreement can be forwarded to e-mail address: info@bolotovIP.com marked for Saule Kulzhambekova.