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Continuation of an exclusive interview with the organizers of the franchise exhibition BUYBRAND Expo, Ekaterina Soyak, about franchising in Russia.

Is there still a legal issue in Russian franchising? To what extent does the legislation regulate the relations of the parties in this business?

Now Russia is experiencing a franchise boom. At some point, it was the same in the USA: a lot of franchising enterprises arose, which then went bankrupt. At that time, the country decided to create a law that would regulate the franchise market. This made life much more difficult for businessmen, because they had to provide a pile of documents before getting permission to open a franchise. However, this also contributed to the establishment of order.
In Russia, interaction with state institutions is structured differently. If the Russian franchise market is completely under the control of the state, it will simply die. It is in the interests of business to regulate the market independently. To date, the legal relationship between the franchisor and the franchisee is regulated by Chapter 54 of the Civil Code of the Russian Federation. In addition to the commercial concession agreement, the relations of the parties may be regulated by a license agreement, a contract for the supply or provision of services, as well as their various combinations.

– What is the dynamics of franchising development in the Russian regions?

"We are seeing a great trend, namely the emergence of local brands in the regions of Russia. Previously, all business started in Moscow and St. Petersburg as in the most developed and large cities. Now, year after year, more and more high-quality regional concepts appear at the BUYBRAND Expo. These franchises are already well established at home and are striving to reach the federal and international level. In addition, local franchises are actively supported by municipalities. So, this year 11 Tomsk franchises and a whole pool of franchises from Tatarstan are coming to the exhibition, which will present their collective stands.
As for the subject, everything has been unchanged here for the third year in a row: the catering sector is in the lead. Fast food is very popular, everywhere everyone is interested in author's burgers offering a delicious and healthy product and interesting design solutions. By the way, regional brands can offer not just traditional burgers, but their own national pies and pastries, which attracts a lot of investors.
In addition, there is a high demand for the children's segment in the regions: private kindergartens, entertainment centers, language courses, toy stores and the like. Small formats, such as takeaway coffee, are gaining popularity in a number of regions. New concepts are emerging in the service segment: self-service car washes, interesting projects related to IT technologies.

– What risks can a franchisee and a franchisor face when concluding a deal? What points of the contract should you pay special attention to?

Of course, the risk of bankruptcy in franchising is significantly lower than in a business from scratch. However, the biggest Russian problem is that no one likes to read the contract, and this can lead to serious problems. The agreement should always specify on what conditions the termination of the contract will occur if the franchisee suddenly wants to terminate the business relationship. After all, in this case, it is the franchisee who faces high fines for logging out of the system. All the nuances must be spelled out in the contract. It needs to be studied very carefully, if possible, to attract a competent lawyer.
Also, do not forget that there are many weak concepts, often without any standards and systematic approaches. When buying a franchise, an entrepreneur, tempted by low investments when entering a business, sometimes does not understand what exactly is being offered to him. You definitely need to spend time and learn everything about the franchisor, his concept, get maximum information about the franchise from various sources and be sure to communicate with existing franchisees. If for some reason the franchisor does not give a list of existing franchisees, it is worth looking for something else.

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