Ukraine Adopts Regulation on State Registration of Franchise Agreements

Last month the Ukrainian Ministry of Justice adopted the Regulation on state registration of commercial concession agreements, which will enter into force on April 21, 2015.

According to the Ukrainian legislation, a commercial concession agreement is what in other parts of the world is usually called a franchise agreement.

The Ukrainian Civil Code provisions, adopted more than 10 years ago, provide that if a franchisor (a foreign entity) enters into a franchise agreement with a Ukrainian entity, the company’s registered office, that is the office that registered the Ukrainian entity, should register the franchise agreement. Otherwise the agreement will not be considered valid with regard to third parties. Until now there was no regulation for such registration procedures and this has caused problems because tax authorities usually regarded themselves as the third party and tried to reduce tax credits resulting from payments made under such agreements.

The Regulation contains provisions on registration of franchise agreements, amendments to the agreements, termination of the agreements, and on invalidating such registrations.

The Regulation provides that, among other documents to be filed together with the application for registration, there should be a document that confirms the existence of franchisor’s IP rights. However, it is unclear what this document should be if a trade secret is the subject of a franchise agreement.

The Regulation provides that the registration procedure should be completed within 5 working days after the filing date and that no fees should be charged. The application may be filed in person or sent by post or email, but there are different requirements how it should be signed depending on whether it is sent by post, email or submitted in person in paper format.

By: Yuriy Karlash

For more information, please contact Yuriy Karlash at our Ukraine office.