On 18 July, a federal law came into force, amending the second section of the Civil Code of Russia on regulating franchising agreements (the "Law").

According to the Law, a franchisee may now include a number of obligations in a franchising agreement, such as:

  • to sell and resell goods that are produced and/or procured, and to complete work or provide services at the prices set by the franchisor;
  • not to sell (not to execute, not to provide) similar goods (work, services) bearing the trademark or trade name of other franchisors; and
  • to sell goods, complete work or provide services only within a specific area.

The Law also renders invalid the previous obligation of selling goods, completing work or providing services only to those people located or residing within a specific area.

Moreover, the Law establishes a list of requirements that a franchisee may present to a counterparty if the latter refuses to extend the agreement. If the parties do extend the agreement, they may agree on amending the terms.

Finally, at any time, either party has the right to terminate the agreement by giving the other party at least 30 days' prior notice; however, there must be a condition for compensation for release from an agreement. In addition, the franchisee may unilaterally refuse to fulfil the franchising contract if the franchisor has repeatedly violated specific laws.

The Law does not indicate whether it applies to agreements that have been entered into prior to the Law coming into force. There is no urgent need to amend currently valid agreements, given that the Law's provisions will only come into force 90 days after it has been published, and it has not been published yet.

[Federal Law No. 216-FZ "On Amending the Second Section of the Civil Code of the Russian Federation", dated 18 July 2011]