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CHAPTER VI. SOME OTHER SPECIFIC COMMERCIAL ACTIVITIES

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SECTION 8. COMMERCIAL FRANCHISE

Article 284. Commercial franchise

Commercial franchise means a commercial activity whereby franchisors permit and require franchisees to undertake by themselves to purchase or sell goods or provide services on the following conditions:

1. The purchase or sale of goods or provision of services shall be conducted in accordance with methods of business organization prescribed by franchisors and associated with the franchisors’ trademarks, trade names, business knows-how, business slogans, business logos and advertisements.

2. Franchisors shall be entitled to supervise and assist franchisees in conducting their business activities.

Article 285. Commercial franchise contracts

Commercial franchise contracts must be made in writing or in other forms of equivalent legal validity.

Article 286. Rights of franchisors

Unless otherwise agreed, franchisors shall have the following rights:

1. To receive franchise sums.

2. To organize advertising for the commercial franchise system and the commercial franchise network.

3. To conduct periodical or extraordinary inspections of activities of franchisees in order to ensure the uniformity of the commercial franchise system and the stability of quality of goods and services.

Article 287. Obligations of franchisors

Unless otherwise agreed, franchisors shall have the following obligations:

1. To supply documents guiding the commercial franchise system to franchisees;

2. To provide initial training and regular technical assistance to franchisees for managing the latter’s activities in accordance with the commercial franchise system;

3. To design and arrange places of sale of goods or provision of services at the expenses of franchisees;

4. To guarantee the intellectual property rights over objects stated in franchise contracts;

5. To equally treat all franchisees in the commercial franchise system.

Article 288. Rights of franchisees

Unless otherwise agreed, franchisees shall have the following rights:

1. To request franchisors to provide fully technical assistance related to the commercial franchise system;

2. To request franchisors to equally treat all franchisees in the commercial franchise system.

Article 289. Obligations of franchisees

Unless otherwise agreed, franchisees shall have the following obligations:

1. To pay franchise sums and other amounts under commercial franchise contracts;

2. To invest adequate material facilities, financial sources and human resources to take over business rights and know-how transferred by franchisors;

3. To submit to the control, supervision and instruction by franchisors; to comply with all requirements set forth by franchisors on designing and arrangement of places of sale of goods or provision of services;

4. To keep secret the franchised business know-how even after the expiration or termination of commercial franchise contracts;

5. To stop using trademarks, trade names, business slogans, logos and other intellectual property rights (if any) or systems of franchisors upon the expiration or termination of commercial franchise contracts;

6. To manage their activities in accordance with the commercial franchise system;

7. Not to sub-franchise without permissions of franchisors.

Article 290. Sub-franchise to a third party

1. A franchisee shall be entitled to sub-franchise to a third party (referred to as sub-franchisee) if it is so consented by the franchisor.

2. Sub-franchisees shall have the rights and obligations of franchisees provided for in Articles 288 and 289 of this Law.

Article 291. Registration of commercial franchises

1. Before granting commercial franchises, intended franchisors must register them with the Trade Ministry.

2. The Government shall specify the conditions for conducting business under commercial franchise and the order and procedures for registering commercial franchises.

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