Under the agreement of complex entrepreneurial license (franchising agreement) one party (complex licensor or franchisor) undertakes to provide the other party (complex licensee - the franchisee) on the reward basis a set of exclusive rights (license complex), including, in particular, the right to use the trade name of the licensor and protected commercial information, as well as other objects of exclusive rights (trademarks, service marks, patents, etc.) provided by the agreement, for use in the business of the licensee.
The franchise agreement provides the right to use license unit, business reputation and business experience of the franchisor in a specific volume (in particular, with minimal and (or) the maximum amount of use), with or without indication the territory of use, with respect to a specific field of activity.
The franchise agreement must be in writing and should be registered with the authorized body of the Republic of Kazakhstan.
A fee under a franchise agreement may be payable by the franchisee in the form of:
- a fixed one-off payment or periodic payments (with the most common being a fixed initial payment effected immediately after entering into the agreement with further payments of a certain percentage of the total sales of goods, services or works (royalty);
- deductions from proceeds, mark-ups on the wholesale price of goods transferred by the franchisor for resale; or
- in any other form.
Sales proceeds, fees (including a fee payable under the franchise agreement), and royalty are subject to income tax. However, in a number of cases of royalty payment, the income tax may be decreased and not to exceed 10 per cent for some countries with which Kazakhstan has a double tax treaty.
Currently, franchising in Kazakhstan is used in almost all industries and covers the areas of trade, services for population and various production areas.
Now there are more than 3,000 franchise companies employ over 25,000 people; the turnover of the franchise sector reached US $1 billion per year. Dynamics of development of franchising in Kazakhstan is increasing every year. Currently more than 30 domestic companies declared suggestion of their own franchise.
Now in Kazakhstan there are such global brands as World Class, Pizza Hut, Burger King, Gloria Jeans; sub-brands Rosinter Restaurants Holding, Zara, Rixos, Coca-Cola, Baskin Robbins, Adidas, Benetton and many others. Also there are many low-cost franchises in the trade of consumer goods, services, crafts, media, Internet technology, etc. We can observe franchises of new generation such as social and event franchise, for example, the franchise Global Entrepreneurship Week. Now more than 200 foreign franchisors are actively looking for partners in Kazakhstan and over 5,000 are potentially ready to work with local entrepreneurs.We offer the following services:
- Drafting of franchising agreements;
- Drafting, filing and follow up of applications for registration of franchising agreements;
- Legal advice in relation to the rights to IP objects assigned under an agreement;
- Drafting of memorandums, legal opinions on conformity of agreements with the requirements of the legislation of the Republic of Kazakhstan;
Legal assistance in regulation of disputes related to above agreements in court and out-of-court procedures.