Introduction
In recent years, Uzbekistan has seen a significant increase in interest in franchising. A franchise (or franchising, as it is often referred to) represents a comprehensive license that grants the right to use a specific business model, trademarks, know-how, and other components of a successful business. This tool is actively used by both local entrepreneurs and international brands seeking to enter the Uzbek market. As a result, understanding the legal aspects of franchise agreement registration is becoming increasingly important for many market participants.
Key Aspects of Franchise Registration in Uzbekistan
In Uzbekistan, as in other countries, the terms "franchise" and "franchising" are used interchangeably. However, in a legal context, it's crucial to use the correct terminology to avoid misunderstandings and potential legal issues. According to the Civil Code of Uzbekistan, a franchise is defined as a Comprehensive Business License (franchising).
Registering a franchise agreement not only protects intellectual property rights but also confirms the legitimacy of the business in the market. More and more international and local brands in Uzbekistan are turning to franchising as a way to expand their businesses. This trend is driven by the growing demand for proven business models and entrepreneurs' desire to minimize risks associated with launching new projects.
Today, Uzbekistan's market is rapidly developing, with many international and local brands operating under the franchising model. These brands are thriving in various sectors, including food service, retail, hospitality, and more. Their presence in the market highlights the high potential of franchising in Uzbekistan, attracting attention from both local entrepreneurs and international companies.
The Franchise Registration Process in Uzbekistan
The registration of a franchise agreement in Uzbekistan is mandatory and regulated by law, specifically by the Decree of the Cabinet of Ministers of the Republic of Uzbekistan "On the Approval of the Administrative Regulation for Providing State Services for the State Registration of Comprehensive Business License (Franchising) Agreements." The registration process involves the following steps:
Differences Between a Franchise and a Licensing Agreement
It is important to understand that although a franchise and a licensing agreement may seem similar at first glance, there are fundamental differences between them.
A franchise represents a more complex structure, not only involving the transfer of rights to use a trademark or technology but also the entire business model. The franchisor provides the franchisee with a complete package for running the business, including marketing strategies, operational standards, training, support, and other elements that enable the franchisee to effectively manage their business according to the franchisor's model. The primary goal of a franchise is to replicate a successful business model, making it attractive to entrepreneurs who wish to start a business with minimal risk.
On the other hand, a licensing agreement exclusively deals with the transfer of rights to use specific intellectual property, such as a trademark, patent, know-how, or technology. The licensee receives the right to use the intellectual property in accordance with the terms of the agreement but does not receive a complete package for running the business. A licensing agreement does not involve mandatory transfer of business methods, training, or ongoing support, which significantly distinguishes it from a franchise. Furthermore, a licensing agreement is registered separately by the Ministry of Justice of Uzbekistan in accordance with the Rules for the Registration of Licensing Agreements.
Thus, the main difference between these two types of agreements lies in the scope of the rights and obligations granted. A franchise encompasses a complete set of rights and responsibilities related to running a business, whereas a licensing agreement is limited to the transfer of rights to use specific intellectual property. This aspect makes a franchise a more structured and regulated form of business relations, requiring special attention during its registration and management.
Responsibilities and Termination of the Franchise Agreement
Franchisor bears subsidiary liability for claims against the franchisee regarding the quality of goods or services provided under the agreement. This means that if claims are made against the franchisee, the franchisor may be held liable, emphasizing the importance of adhering to quality standards and the terms of the agreement.
The agreement may be terminated either upon the expiration of its term or prematurely by mutual agreement of the parties. It's important to note that for the termination of a perpetual agreement, one party must notify the other at least six months in advance. The termination of the right to a trade name included in the licensing complex is also grounds for terminating the agreement.
These provisions ensure a balance of interests between the parties and protect their rights in case of disputes or the need to modify the terms of cooperation.
Conclusion
Registering a franchise agreement in Uzbekistan is a crucial step in ensuring the protection of both the franchisor's and the franchisee's rights. Adhering to all legal requirements and procedures guarantees successful business operations and minimizes risks. With the growing interest in franchising in Uzbekistan, this topic is becoming increasingly relevant for entrepreneurs looking to enter the Uzbek market using proven business models.