Chapter 54. Commercial Concession.

Article 1027. Agreement on commercial concession.
1. Under a commercial concession agreement, one party (right holder) undertakes to give the other party (user) for a fee for a period or without a deadline the right to use in the user's business activity a set of exclusive rights belonging to the right holder, including the right to a company name and (or) the commercial designation of the right holder, for the protected commercial information, as well as for other objects of exclusive rights stipulated by the contract - trademark, service mark etc. 2. The contract of commercial concession provides for the use of a set of exclusive rights, business reputation and commercial experience of the right holder in a certain amount (in particular, with the establishment of a minimum and (or) maximum amount of use), with or without indication of the territory of use in relation to a certain area of ​​business activity the sale of goods received from the copyright holder or produced by the user, the implementation of other trading activities, the performance of work, the provision of meadow). 3. The parties to the commercial concession agreement may be commercial organizations and citizens registered as individual entrepreneurs.

Article 1028. Form and registration of the agreement of the commercial concession.
1. A contract of commercial concession must be concluded in writing. Failure to comply with the written form of the contract entails its invalidity. Such a contract is considered void. 2. The agreement of the commercial concession shall be registered by the authority that registered the legal entity or the individual entrepreneur acting as the holder of rights under the agreement. If the rightholder is registered as a legal entity or an individual entrepreneur in a foreign country, registration of the agreement of the commercial concession is carried out by the authority that registered the legal entity or the individual entrepreneur, which is a user. In relations with third parties, parties to a contract of commercial concession are entitled to refer to the contract only from the time of its registration. A contract of commercial concession for the use of an object protected in accordance with patent law shall also be registered with the federal executive body in the field of patents and trademarks. In case of non-compliance with this requirement, the contract is considered void.

Article 1029. Commercial subconcession.
1. A contract of commercial concession may provide for the right of a user to allow other persons to use the complex of exclusive rights granted to him or part of this complex under the terms of subconcession agreed with the rightholder or specified in the agreement of the commercial concession. The contract may provide for the obligation of the user to provide for a certain period of time a certain number of persons the right to exercise these rights on subconcession terms. A commercial subconcession agreement cannot be concluded for a longer period than the agreement of commercial concession on the basis of which it is concluded. 2. If the agreement of commercial concession is invalid, the agreements of commercial subconcession concluded on the basis of it. 3. Unless otherwise stipulated by the agreement of the commercial concession concluded for a period in case of early termination of the rights and obligations of the secondary rightholder under the agreement of the commercial subconcession (the user under the agreement of the commercial concession) shall be transferred to the rightholder if he does not refuse to assume the rights and obligations of this contract. This rule is accordingly applied at termination of the agreement of the commercial concession concluded without specifying the term. 4. The user shall bear subsidiary liability for the harm caused to the right holder by the actions of secondary users, unless otherwise provided by the agreement of the commercial concession. 5. The rules on the contract of commercial concession provided for in this Chapter shall be applied to the contract of commercial subconcession, unless otherwise following from the peculiarities of the subconcession.

Article 1030. Remuneration under the agreement of commercial concession.
Remuneration under the agreement of commercial concession can be paid by the user to the right holder in the form of fixed one-time or periodic payments, deductions from the proceeds, mark-up on the wholesale price of goods transferred by the right holder for resale, or in another form provided by the agreement.

Article 1031. Obligations of the copyright holder.
1. The rightholder must: provide the user with technical and commercial documentation and provide other information necessary for the user to exercise the rights granted to him under the franchise agreement, and instruct the user and his employees on issues related to the exercise of these rights; to issue to the user the licenses stipulated by the contract, ensuring their execution in the prescribed manner. 2. Unless otherwise provided by the agreement of the commercial concession, the right holder shall: ensure the registration of the contract of commercial concession (clause 2 of Article 1028); provide the user with ongoing technical and advisory assistance, including assistance in training and improving the skills of employees; control the quality of goods (works, services) produced (performed, rendered) by the user on the basis of a contract of commercial concession.

Article 1032. Duties of the user.
Given the nature and characteristics of the activities carried out by the user under a commercial concession agreement, the user must: to use, in the exercise of the activities provided for by the contract, the corporate name and (or) the commercial designation of the right holder in the manner specified in the contract; ensure compliance with the quality of the goods produced by them on the basis of a contract, the work performed, the services rendered to the quality of similar goods, works or services produced, performed or rendered directly by the copyright holder; comply with the instructions and instructions of the right holder, aimed at ensuring compliance of the nature, methods and conditions of use of the complex of exclusive rights with how it is used by the right holder, including instructions regarding the external and internal design of commercial premises used by the user in exercising the rights granted to him under the contract; render to buyers (customers) all the additional services that they could rely upon, purchasing (ordering) a product (work, service) directly from the copyright holder; not to disclose secrets of the production of the right holder and other confidential commercial information received from him; provide a specified number of subconcessions, if such an obligation is provided by the contract; inform buyers (customers) in the most obvious way for them that it uses a company name, commercial designation, trademark, service mark, or other means of individualization by virtue of the agreement of the commercial concession.

Article 1033. Restrictions on the rights of the parties under a commercial concession agreement.
1. A contract of commercial concession may provide for restrictions on the rights of the parties under this agreement, in particular, may be provided for; the obligation of the right holder not to grant to other persons similar complexes of exclusive rights for their use in the territory assigned to the user or to refrain from their own similar activities in this territory; the user's obligation not to compete with the copyright holder in the territory covered by the agreement on commercial concession in respect of business activities carried out by the user using exclusive rights belonging to the copyright holder; the user’s refusal to obtain under the commercial concession agreements similar rights from competitors (potential competitors) of the right holder; the user's obligation to coordinate with the copyright holder the location of commercial premises used in the exercise of the exclusive rights provided under the contract, as well as their external and internal design. Restrictive conditions may be invalidated at the request of the antimonopoly authority or other interested person, if these conditions, taking into account the state of the relevant market and the economic situation of the parties, contradict the antimonopoly legislation. 2. Such conditions, which restrict the rights of the parties under a commercial concession agreement, are insignificant, by virtue of which: the right holder has the right to determine the price of sale of the goods by the user or the price of works (services) performed (rendered) by the user, or to set the upper or lower limit of these prices; the user has the right to sell goods, perform works or render services exclusively to a certain category of buyers (customers) or exclusively to buyers (customers) having a location (residence) in a territory specified in the contract.

Article 1034. Responsibility of the right holder for the requirements of the user.
The rightholder bears subsidiary responsibility for the claims to the user regarding the non-conformity of the quality of the goods (work, services) sold (performed, rendered) by the user under the agreement of the commercial concession. According to the requirements for the user as the manufacturer of the products (goods) of the right holder, the right holder shall jointly and severally respond to the user.

Article 1035. The right of the user to enter into a contract of commercial concession for a new term.
1. A user who has duly performed his duties has the right to conclude a contract for a new term under the same conditions upon expiration of the term of the agreement of commercial concession. 2 extend to the same territory in which the terminated agreement was valid. If before the expiration of the three-year period the right holder wishes to grant someone the same rights that were granted to the user under the terminated contract, he is obliged to offer the user to enter into a new contract or to compensate for the losses incurred. When concluding a new contract, its conditions must be no less favorable for the user than the conditions of the terminated contract.

Article 1036. Amendment of the agreement of commercial concession.
The commercial concession agreement may be modified in accordance with the rules provided for by Chapter 29 of this Code. In relations with third parties, the parties to the contract of commercial concession are entitled to refer to the amendment of the contract only from the moment of registration of this change in the manner prescribed by paragraph 2 of Article 1028 of this Code, unless they prove that the third party knew or should have known about the change of the contract earlier.

Article 1037. Termination of a contract of commercial concession.
1. Each of the parties to a contract of commercial concession entered into without specifying a term shall have the right to withdraw from the contract at any time, notifying the other party six months in advance, unless the contract provides for a longer period. 2. Early termination of a contract of commercial concession concluded with an indication of a term, as well as termination of an agreement concluded without specifying a term, shall be subject to registration in accordance with the procedure established by paragraph 2 of Article 1028 of this Code. 3. In the event of the termination of the rights to the company name and commercial designation of the right holder, without replacing them with new similar rights, the agreement of the commercial concession shall be terminated. 4. When the right holder or user is declared insolvent (bankrupt), the contract of commercial concession is terminated.

Article 1038. Preservation of the contract of commercial concession in force at the change of the parties.
1. Transfer to another person of any exclusive right included in the complex of exclusive rights granted to the user is not a basis for changing or terminating the agreement of the commercial concession. The new rightholder becomes a party to this contract in terms of the rights and obligations relating to the transferred exclusive right. 2. In the event of the death of the right holder, his rights and obligations under the contract of commercial concession shall be transferred to the heir, provided that he is registered or within six months from the date of opening the inheritance is registered as an individual entrepreneur. Otherwise, the contract is terminated. The exercise of the rights and duties of the deceased holder until the heir accepts these rights and obligations or prior to registering the heir as an individual entrepreneur is carried out by a manager appointed by a notary.

Article 1039. Consequences of a change of company name or commercial designation of the holder.
If the holder changes its corporate name or commercial designation, the rights to use of which are included in the complex of exclusive rights, the commercial concession agreement is valid for the new corporate name or commercial designation of the legal owner, if the user does not require termination of the agreement and compensation for damages. In case of continuation of the contract, the user has the right to demand a proportionate reduction of the remuneration due to the right holder.

Article 1040. Consequences of the termination of the exclusive right, the use of which is granted under a contract of commercial concession.
If during the period of validity of the contract of commercial concession the validity of the exclusive right, the use of which is granted under this contract, has expired, or such right has been terminated for another reason, the agreement of the commercial concession continues to be valid, except for the provisions relating to the terminated right, and the user contract, shall have the right to demand a proportionate reduction of the remuneration due to the right holder. In the event of the termination of the rights to the company name or commercial designation of the right holder, the consequences are stipulated by clause 2 of Article 1037 and Article 1039 of this Code.

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