Are there any registration requirements for franchisors and/or franchisees? If so, please describe them and include any potential consequences for failing to comply. Is there an obligation to update existing registrations? If so, please describe.
Franchise & Licensing
There are no registration requirements for franchisors and/or franchisees. When a franchise agreement involves the assignment of Intellectual property rights, such as the use of a trademark, we advise that a licensing agreement and a trademark registration will be necessary. It should be noted that Angolan jurisdiction only ensures proper protection to trademarks when they are duly registered before the Angola Industrial Property Institute (see our response to question 8. below).
Canadian provincial franchise legislation is enforced only by private rights of action. Currently no province has appointed a regulatory authority to monitor and enforce compliance. Accordingly, no registration of franchisors or franchisees, and no filing of disclosure documents, is required.
Local laws and regulations provides no registration or notarisation requirements for franchisors or franchisees.
There are no specific registration requirements for franchisors and/or franchisees. However, franchisee may optionally register a franchising agreement in part where it contains licensing of trademarks, with the Patent Office of Azerbaijan. This could be done by way of registering whole franchising agreement or an extract from such agreement.
There are no registration requirements for franchisors and/or franchisees in Denmark.
There is no specific registration requirement in order to set up a franchise system in France, but generally, any company (including foreign entities) engaging in commercial activities must be registered with the Registre du commerce et des sociétés. Notably, there is no requirement to register a Franchise Disclosure Document (‘FDD’).
There is a requirement to register trademarks that will be licensed to the franchisee, with either the French National Register (’INPI’) or the European Union Intellectual Property Office (’EUIPO’). Only registered trademarks can be protected.
In Egypt, there are no registration laws that require the registration of a party as a franchisor or a franchisee, however, it should be noted that in order for said party to be able to practice its activity, said party should maintain the activity by having a practicing license issued from the Egyptian Chamber of Commerce, in addition the activity should be registered at a competent authority i.e. the Commercial Registration Authority which will issue a Commercial Register indicating that said party is permitted to practice trade and this will include entering into the franchise activities.
Greek Law does not provide for any registration requirements for franchisors and/or franchisees. However, the registration may be necessary within the context of other laws such as Law 4072/2012 on trade marks or Law 1733/87 on transfer of technology, inventions and technological innovations. In the event that the registration requirements under the above laws are not complied with, the franchisee may not invoke the relevant rights against third parties before the Courts.
Registration with the Commercial Register: A franchise agreement must be registered with the Commercial Register file related to the corporate structure resident in Lebanon. If both the franchisor and the franchisee are corporate structures resident in Lebanon, the franchise agreement must be registered in the Commercial Register of both structures. This registration is for publicity purposes only and does not affect the validity of the agreement. Any updates or amendments to the agreement must also be registered with the Commercial Register.
Registration with the Ministry of Economy: the trademark used by the franchisor and franchisee must be registered with the Trademark Register at the Ministry of Economy. Article 72 of the resolution no.2385/1924 issued on January 17, 1924, as amended by the law of 31/1/1946 states: “Personal ownership of a trademark shall not be claimed unless such a trademark has been previously filed in the Protection Bureau as per the provisions of Article (79) and subsequent articles thereto.”
Accordingly, the trademark will not be protected unless registered with the trademark register.
NB. The legislator did not initiate a special register at the ministry of economy for the registration of franchise agreements similar to the register created for the registration of the commercial representative agreements.
Yes. Franchisors are required to be registered (in other words, file for records) with the competent Commerce Administration Authorities (Ministry of Commerce or its local branch, as the case maybe) within fifteen days.
Consequences for failure to comply with the registration requirements: the Commerce Administration Authorities shall order the franchisor to file for records within the stipulated period and impose a fine ranging from RMB10,000 to RMB50,000; where the franchisor fails to file records within the stipulated period, a fine ranging from RMB50,000 to RMB100,000 shall be imposed and a public announcement shall be made.
Yes, in case of change in the company registration, business resources and franchise outlet locations in China, franchisors shall update existing registrations with the authorities. In addition, a franchisor shall report to the competent Commerce Administration Authorities the information of the execution, revocation, termination and renewal of the franchise contracts during the preceding year by 31 March each year.
It is required that, either the executed franchise agreement or a summarized version of it containing a list of the trademarks being licensed along with their registration information and international class, among other relevant requisites of information, be submitted with the IMPI for registration purposes. An original counterpart of such agreement which has been translated into Spanish by a certified translator or a bilingual version in a double column format must be filed jointly with the registration application.
Certain information may be excluded from the summary of the franchise agreement to be filed before the IMPI, such as terms regarding royalties or payments, confidential information and technical information, among others.
Such filing may be carried out by either of the parties to the franchise agreement and there is no specified period of time to do so. The summary of the franchise agreement, additionally to the information stated above, must include the designation of individuals who are authorized by the parties to carry out such filing. The summary does not have to follow any specific form and the IMPI is not authorized to reject any filings.
Failure to comply with this registration obligation would result in the relevant agreement not being effective before third parties and, in consequence, a foreign franchisor being the holder of the trademark registrations, will not be able to prove the use of the same in Mexico through a registered franchisee or licensee, being therefore the trademarks exposed to a cancellation action by a third party, alleging lack of use of the same by its owner.
There is no legal obligation to register the disclosure document.
Considering that there is no specific franchise law, franchisors and franchisees are not required to register before any regulatory authority.
There are no registration requirements for franchisors and/or franchisees in the Philippines other than the ordinary business registration with the DTI for sole proprietorships or with the Securities and Exchange Commission (“SEC”) for partnerships and corporations.
Yes, registration of the grant to use IP rights, including trademarks, is required under every type of franchise. In other words, franchise or license grant, which is targeted at Russia, including the one governed by foreign applicable law, must be registered with the Federal Service for Intellectual Property (hereinafter – Rospatent). Importantly, a franchise or license that is not registered with Rospatent will be considered as non-granted.
There is a choice of documents which may be submitted to Rospatent in support of the application for registration. Parties or one of the parties may file the original franchise agreement, or the notarize excerpt from the original contract, or the notification. If the parties do not wish to disclose the original franchise agreement for certain reasons, the best option is to submit the excerpt or notification with Rospatent.
Before filing, it is vital to ensure that the document filed to Rospatent contains all of the mandatory clauses and terms, as required by Russian law and administrative regulations. Failure to provide such may result in the delay or refusal in franchise registration.
There are no federal or state franchise laws that impose requirements, such as registration on franchisees; such requirements are only imposed on franchisors.
On the federal level, the Federal Trade Commission (the “FTC”) Franchise Rule (the “FTC Rule”) requires franchisors to prepare and disseminate a Franchise Disclosure Document (the “FDD”) to prospective franchisees; it does not, however, require any sort of filing or registration.
In contrast, 14 states (California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin) have enacted laws requiring that a formal filing or registration be submitted to the state prior to any offer or sale in that state. In 10 of these states, franchise law administrators conduct an in-depth review of a franchisor’s FDD, financial statements and other related materials and information submitted in connection with the filing in order to determine whether it will approve the franchisor’s registration (Indiana, Michigan, South Dakota and Wisconsin typically require a “notice only” filing and ordinarily do not subject the FDD to an in-depth review). In connection with this review process, the franchise law administrators will often issue so-called “comment letters” requiring the franchisor to make changes to its FDD or related offering documents, and may sometimes impose other conditions that the franchisor must satisfy (such as, by way of example, requiring that the franchisor agree to defer collection of initial fees if the administrator believes that the franchisor is not adequately capitalized to satisfy its initial pre-opening obligations to its franchisees) in order to secure state registration. In addition to the foregoing, these state laws also empower administrators to deny, suspend or revoke a franchisor’s right to offer and sell franchises in their respective states if the franchisor’s FDD does not comply with the standards prescribed by law; the financial condition of the franchisor makes it uncertain that the franchisor will be able to fulfil its duties to prospective franchisees; or, any of the franchisor’s employees, managers, owners, or others individuals involved in the operation or sale of franchises has a criminal or other record of misconduct that is believed to pose an unacceptable risk.
Potential Consequences for Failing to Register
All states with franchise registration and disclosure laws make it unlawful to offer or sell a franchise prior to registration of the franchise offer with the state, unless an exemption is available (and properly perfected). These state laws grant franchise administrators broad enforcement powers. In the event an administrator learns that a franchisor has illegally sold one or more franchises without properly securing state registration (or an exemption therefrom), it may: (i) refuse to register the franchisor in that state in the future; (ii) issue a stop order to prevent the franchisor from conducting any further illegal offers or sales in the state; (iii) levy fines and bring civil actions (which can include injunctions to stop further violations); (iii) seek restitution and damages on behalf of injured franchisees; and/or, (iv) impose criminal penalties such as fines and/or jail time (however, it would likely take a truly extreme and unique situation for a criminal action to be pursued). In addition, certain registration states provide aggrieved franchisees with private civil rights of action against their franchisors (and in some states, also against the franchisors’ officers, directors and other employees). In such cases, aggrieved franchisees may assert claims for actual damages, rescission (i.e., essentially nullifying the franchise agreement and restoring the franchisee to the same position it would be in had it never acquired the franchise), and in some cases, punitive damages.
Requirement to Update Registration
Once a franchisor has prepared its initial FDD pursuant to the FTC Rule and filed and registered such FDD as required under the state franchise registration and disclosure laws mentioned above, in order to continue offering and selling franchises, the franchisor must revise and update the FDD at least annually. In addition, both the FTC Rule and state franchise registration and disclosure laws require franchisors to amend their FDD upon the occurrence of any material change (the required time for making such amendment ranges from promptly after the material change to quarterly, depending upon the materiality of the change). For purposes of the FDD, a material change includes any fact, circumstance or set of conditions that has a substantial likelihood of influencing a reasonable franchisee or a reasonable prospective franchisee in the making of a significant decision relating to a franchise business or which has any potential significant financial impact on a reasonable franchisee or reasonable prospective franchisee. Examples of material changes that would affect the information contained in an FDD include: (i) closing or failing to renew a substantial portion of the franchisor’s franchises; (ii) a significant change in the franchisor’s corporate structure or management; (iii) a material adverse change in the franchisor’s financial condition; (iv) a material change in the terms of the offering itself; (v) the commencement of litigation or arbitration alleging certain types of claims against the franchisor or its principals; or, (vi) a change of the franchisor’s address. In most states which have enacted franchise sales laws, the occurrence of an event requiring the amendment of a franchisor’s FDD, or the annual amendment requirement imposed in connection with franchise registration renewal, requires the franchisor to immediately cease offering and selling franchises until the amended FDD is prepared and re-registered (where necessary).
There are no registration requirements in New Zealand.
There are no specific registration requirements or obligations to update existing registrations which are franchise specific. However, changes in the board of directors must be notified to the Business Registry and changes in ownership must be registered in the company's shareholder's registry and notified to the tax authorities. Failing to comply with these obligations could lead to penal and tax consequences.
In Italy there are no registration requirements for franchisors and/or franchisees.
There are no specific registration requirements for franchisors and/or franchisees. However, all UK companies and LLPs must register with the Registrar of Companies and will be subject to official requirements, such as the filing of annual accounts.