Russia changes Franchise law – Can Franchisors now fix the price?

Following an amendment to the Russian Civil Code which was passed on 30 December 2012 franchisors are now able to determine the prices for goods and services which their franchisees sell to consumers. This is a complete departure from the previous law under which such a restriction was void.

The revised article 1033 of the Russian Civil Code contains the right to set the prices for goods and services at which the franchisee must sell.

The new price fixing provision is part of a general revision of several parts of the Russian Civil Code. Other notable changes which will affect franchisors are:

• the introduction of a general obligation to make pre-contractual disclosure – there is no set list of disclosure items but a clear liability for misrepresentation and for the omission of important information;
  
  
• the fact that a party can now be held liable for conducting or breaking off negotiations unfairly, such as conducting negotiations without an intent to enter into an agreement and sudden and unfounded termination of negotiations without prior notice to the other party;
  
  
• with regard to the registration of franchise agreements with Rospatent, going forward it will no longer be the franchise agreement that will be registered but the trademark licence that is granted under the franchise agreement – this should hopefully make registration a less cumbersome experience for franchisors and help speed up the process.

For an unofficial translation of Chapter 54 of the Russian Civil Code which deals with franchising or more information about franchising in Russia please contact Vicky Reinhardt or Babette Marzheuser-Wood.