Transfer of Service Technologies under Franchise Agreement

Roman Petrovich Sklyarenko

The liberalisation of the Soviet economy since the late 1980s has allowed adopting international business practices of the service sector based on agreements for the provision of technology, production secrets and rights of use of a trademark and brand. Over the 30 years, a specific attitude to such agreements has shaped in Russia on the part of the legislative power. Instead of using a single franchise agreement, in absence of an established statutory notion in the legislation, businessmen in the Russian Federation use a set of commercial concession agreements, each governing a specific aspect of the transfer of knowledge, technology, know-how, business practices and rights of use of the trademark or brand. Attempts to use a single agreement falling short of a comprehensive instrument regulating the parties' mutual relations often result in disagreements and legal actions. There is the risk of fraud along the lines of Ponzi schemes with franchise networks exploited as a disguise for massive sales of non-existent technologies, fictitious know-how and stale business processes. The century-long practice of industrially advanced economies in the operation and regulation of franchise relations is vital for Russian businesses.

Volume 12 | 05-Special Issue

Pages: 1232-1237

DOI: 10.5373/JARDCS/V12SP5/20201879