Can a franchisee use the franchisor's TM for goods/services that are not specified in the commercial concession agreement?

No, it cannot. The commercial concession agreement clearly specifies the list of goods and services for which the franchisee has the right to use the TM in accordance with the International Classification of Goods and Services (ICDS). This list is exhaustive. The use of the TM for goods/services that are not specified in the agreement is a violation of the franchisor’s rights and may result in liability provided for by the agreement and/or the law (including compensation for losses, payment of penalties, cancellation of the agreement). In other words, if the franchisee wants to expand the scope of TM use, it is necessary to make the relevant amendments to the contract (conclude an additional agreement) and register them with UKRNOIVI.

Can a franchisor franchise the same TM to several franchisees in the same territory?

Theoretically, it can, but it depends on the terms of the agreement. If a commercial concession agreement provides for an exclusive franchise in a certain territory, the franchisor has no right to grant the right to use the TM to other franchisees in that territory. If the franchise is non-exclusive, the franchisor may have several franchisees in one territory. It is important to clearly state in the agreement whether the franchise is exclusive or non-exclusive and, for example, to define its territory of operation. The lack of a clear definition may lead to conflicts between franchisees and between the franchisee and the franchisor.

What to do if the franchisee wants to change the appearance of the TM (for example, the logo) or its name?

The franchisee is not entitled to independently change the franchisor’s TM. Any changes to the TM (even minor ones) may be made only with the written consent of the franchisor. This is due to the fact that the TM is an intellectual property object and all rights to it belong to the franchisor. In addition, unauthorised changes to the TM may lead to the loss of its identity and, in other words, negatively affect the brand reputation. If the franchisee considers that the TM requires changes, it should apply to the franchisor with a relevant proposal. If the franchisor agrees, the changes should be introduced into the agreement (by concluding an additional agreement) and registered with UKRNOIVI.

Is it possible to use the term "franchise" instead of "commercial concession" in a franchise agreement?

Although in everyday life and in the business environment the term “franchise” is more commonly used, Ukrainian legislation uses the term “commercial concession” (Chapter 76 of the Civil Code of Ukraine). Therefore, it is recommended to use the term “commercial concession” in the agreement regulating franchise relations in Ukraine. The use of the term “franchise” will not be a mistake if it is clearly stated in the agreement that under this term the parties understand a commercial concession agreement in accordance with Chapter 76 of the Civil Code of Ukraine. For example, the following wording can be added: “The parties have agreed that the term “franchise” used in this Agreement means a commercial concession agreement within the meaning of Chapter 76 of the Civil Code of Ukraine”.

Is it obligatory to specify in the commercial concession agreement the amount of the entry (lump sum) fee?

The entry (lump sum) fee is a one-time payment that the franchisee pays to the franchisor when concluding the franchise agreement. In other words, it is a payment for joining the franchise network, for the right to use the brand, business model, know-how, etc. The Civil Code of Ukraine does not require mandatory inclusion of the entry fee clause in the commercial concession agreement. That is, the parties independently decide whether such a fee will be paid and, if so, in what amount. If the parties have agreed to pay an entrance fee, its amount, procedure and terms of payment should be clearly defined in the contract. If the parties have not stipulated the payment of the entrance fee, it is not a violation of the law and does not affect the validity of the contract.

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