Commercial franchise means a commercial activity whereby franchisors permit and require franchisees to undertake by themselves to purchase or sell goods or provide services on the following conditions: (i) The purchase or sale of goods or provision of services shall be conducted in accordance with methods of business organization prescribed by franchisors and associated with the franchisors’ trademarks, trade names, business knows-how, business slogans, business logos and advertisements; and (ii) Franchisors shall be entitled to supervise and assist franchisees in conducting their business activities.
1. Rights of franchisors
According to the provisions of Article 286 of the Commercial Law 2005, unless otherwise agreed, franchisors shall have the following rights:
• To receive franchise sums;
• To organize advertising for the commercial franchise system and the commercial franchise network; and
• To conduct periodical or extraordinary inspections of activities of franchisees in order to ensure the uniformity of the commercial franchise system and the stability of quality of goods and services.
2. Obligations of franchisors
According to the provisions of Article 287 of the Commercial Law 2005, unless otherwise agreed, franchisors shall have the following obligations:
• To supply documents guiding the commercial franchise system to franchisees;
• To provide initial training and regular technical assistance to franchisees for managing the latter’s activities in accordance with the commercial franchise system;
• To design and arrange places of sale of goods or provision of services at the expenses of franchisees;
• To guarantee the intellectual property rights over objects stated in franchise contracts; and
• To equally treat all franchisees in the commercial franchise system.
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