Requirement of state registration
The state registration of franchise agreements, amendments thereto and termination thereof is required by the Civil Code of Ukraine and the Commercial Code of Ukraine.
Even though failure to register the franchise agreement does not entail either nullity or invalidity thereof, absence of the state registration results in the following negative consequences directly set forth by the Civil Code and the Commercial Code:
• the parties to a franchise agreement shall be entitled to refer to the said agreement as well as amendments thereto in their relations with the third party only after its state registration; and
• the parties are deprived of the right to refer to the unregistered franchise agreement in case of a dispute.
Thus, the major problem with the state registration of franchise agreements until recently has been the absence of the legislative framework envisaging the registration procedure, applicable terms or fees.
Registration procedure of franchise agreements
The Procedure envisages that the franchise agreements shall be registered in the State Register of Legal Entities and Individual Entrepreneurs by the relevant state registrars. The place of incorporation of the parties to the franchise agreements is not a decisive factor when it comes to place of registration issue. Holders and users of right, and other authorized representatives may file for respective registrations.
The Procedure contains the detailed requirements to the documents to be submitted to the competent authority in order to register the contract formation, its amendment or termination. It has to be taken into account that the documents (incl. an application form and a franchise agreement) have to be made in Ukrainian. If otherwise, the duly certified translation into Ukrainian shall be provided. The package of documents may be filed directly to the registrar office, sent via post or Registration e-portal. The state registration is free of charge and a decision should be issued within 5 working days from the date of filing.
Advice for franchisors operating on Ukraine
Although failure to register the franchise agreement does not result in its invalidity/nullity, in order to make the agreement fully effective and the parties to franchising agreements have to comply with the requirement of state registration after the Procedure takes effect.
Therefore, it is highly recommended to prepare the prescribed set of documents and register the franchise agreements covered by the Procedure regardless of the fact whether a franchise agreement has been concluded or amended before or after the Procedure enters into force.
It has to be noted that registration of franchising agreements is an important part of the extensive business deregulation plan of the Ukrainian Government. Therefore, the possibility of its cancellation in the future cannot be excluded.
Nataliya Mykolska, IDI franchising country expert for Ukraine