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LAW OF THE REPUBLIC OF MOLDOVA

of October 1, 1997 No. 1335-XIII

About franchizing

(as amended on 06-03-2012)

The parliament adopts this law.

This law determines the relations between the companies, irrespective of type of property and form of business, in the field of provision for the monetary reward of the rights to production and/or sales of products (goods) and rendering services.

Chapter I GENERAL PROVISIONS

Article 1. Concept of franchizing

The franchizing represents system of contractual relations between the companies in case of which one party - the franchiser - provides to other party - the franchisee - the right to production and/or realization of certain type of products (goods), rendering certain services from name and under the trademark of the franchiser, and also the right to the technical and organizational assistance.

Article 2. Franchiser

(1) the Franchiser is the manufacturing company having high reputation in certain market, own trademark and signed the contract of franchizing with other company.

(2) the physical person or legal entity can be the Franchiser:

a) The Republic of Moldova, signed the contract of franchizing with local or overseas enterprise;

b) other country, signed the contract of franchizing with the local company.

Article 3. Franchisee

(1) the Franchisee is the company which signed the agreement of franchizing or created as a result of the conclusion of such agreement.

(2) the Franchisee can be physical person or legal entity:

a) The Republic of Moldova, signed the contract of franchizing with local or overseas enterprise;

b) other country, signed the contract of franchizing with the local company.

Article 4. Legal regulation

(1) the Franchising represents set of the relations of lease, leasing, purchase and sale, the contract, representation, joint business, company with foreign investments.

(2) the Franchising and the legal relationship concerning it are regulated by the Civil code, this law and other regulations.

(3) the Relations between the franchiser and the franchisee which are not determined specified in part (2) acts, are regulated by the agreement of franchizing.

(4) If the international agreement, one of the parties of which is the Republic of Moldova, in the field of franchizing the regulations differing from provided by this law are established, then regulations of the international agreement extend to the local companies which signed contracts of franchizing with overseas enterprises.

Article 5. Scope of application and objects of franchizing

(1) the Franchising is allowed in all fields of economy except for forbidden by the legislation and covers all types of business activity. For implementation of separate types of such activities receipt of the state license is obligatory.

(2) Objects of franchizing are production and/or realization of the franchisee of products (goods), rendering the services conforming to the standards and quality requirements established by the franchiser.

(3) the Franchiser has the right to sign contracts with several companies at the same time.

Article 6. Franchizing forms

(1) the Franchising can be performed in corporate or commercial form.

(2) the Corporate form of franchizing provides participation of the franchisee in complete production cycle of the franchiser. Are characteristic of it:

a) close contact of the franchiser and franchisee;

b) permanent exchange of information;

c) detailed regulation of activities and high degree of responsibility of the franchisee.

(3) the Commercial form of franchizing provides realization of the franchisee of finished goods (goods) or rendering services to them. Are characteristic of it:

a) narrow specialization of the franchisee in realization of one type of products (goods) or rendering one type of service;

b) obtaining by the franchiser of the fixed share from total sales;

c) the risk of the franchisee connected with sales of products (goods) or rendering services;

d) low degree of regulation of obligations of the franchisee.

Article 7. Forms of business and order of registration of participants of franchizing

(1) Participants of franchizing perform the activities in any form of business according to the legislation of the countries of their residence.

(2) the Local company existing before agreement signature of the franchizing having the right to keep the form of business.

(3) the Company created as a result of the conclusion of the agreement of franchizing is registered according to the procedure, established by the legislation of the country of his residence.

(4) Participants of franchizing have own balances and accounts in banks, independently provide maintaining accounting and statistical records according to the procedure, established by the legislation of the countries of their residence.

Chapter II AGREEMENT of the FRANCHISING

Article 8. Development of offers on the conclusion of agreements of franchizing

(1) the Agreement of franchizing can be signed according to the proposal of both the franchiser, and the potential franchisee.

(2) the Offer on the conclusion of the agreement shall contain the business plan including the specification on production and/or sales of products (goods), rendering services, production scales, the amount of compensation of workers, the expected income, scales and the directions of additional investment, other conditions upon the demand of the franchiser or the franchisee.

(3) Information on the existing and potential participants of franchizing gathers and stored by the State agency on intellectual property.

(4) Potential franchisers and the franchisee has the right to apply for necessary information in the State agency on intellectual property. The amount of payment of provision of information is determined by the agency.

(5) Potential franchisers and the franchisee publish the offers in local or foreign mass media and/or report about them to directly potential partners.

Article 9. Agreement of franchizing

(1) Relations of the franchiser and the franchisee are regulated by the agreement of franchizing.

(2) In the agreement are specified:

a) agreement parties;

b) name, type and sphere of use of business;

c) sizes and terms of introduction of payments (one-time initial contribution, royalty (permanent payments), advertizing collection);

d) the rights and obligations of the Parties, including after the duration of the agreement;

e) obligations of the franchiser on assistance of the franchisee;

f) responsibility of the parties for failure to carry out or inadequate accomplishment of terms of the contract;

g) procedure for the dispute resolution;

h) the territory in which the trademark of the franchiser will be used;

i) duration of the agreement and conditions of its change, prolongation or termination;

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