Franchising in the
Ukraine, just as in Belarus or in some of the
former Baltic States, is heavily influenced by
Russian franchise legislation. Although all
these countries have their own franchise code, the
provisions are strikingly similar to the ones
found in the Russian Civil Code.
The
Ukraine offers a lot of franchising opportunity
for potential franchisors. With a GDP growth rate
of 4,4% and an average age of 38 it is an
interesting market for a large variety of
franchise businesses - and there is a great
interest in franchising, too! Last month the
franchise conference "Franchising in the Ukraine.
Realities and Prospects for Development" took
place in association with the Ukraine Franchise
Association and next month the franchise fair
"Franchise 2007" will be hosted in Kiev for the
third time.
With
regard to the legal conditions for franchising in
the Ukraine, foreign franchisors will face by and
large the same obstacles as in Russia.
Nevertheless since the legal systems and
regulations in Russia and the Ukraine are very
similar, it is possible to profit from the
experience gained in Russia when thinking about
introducing a business concept to the Ukraine.
The
main issues for foreign franchisors in the Ukraine
are:
- Statutory liability
of the franchisor for defective products sold by
the franchisee;
- Tax
issues in cross-border franchising;
- Registration of
franchise agreements.
Unfortunately, there
is currently no procedure in place for registering
franchise agreements so that in practice no
registration can occur.
This
situation is often resolved by including a
provision in the agreement which deals with the
fact that registration is not
yet possible.
For
further information on franchising in Russia or
the Ukraine, please contact Babette
Märzheuser-Wood, who is a Russian
speaker, or Mark
Abell.