What is a Franchise Agreement?

In Cyprus, there is no formal definition of a franchise, and there is no recognized group to provide a commonly accepted definition. However we can find one sort of Franchise Definition in one Order issued by Council of Ministers in 1998 which give the definition of “the total of intellectual property rights related to trademarks and trade names, shop signs, standards, designs, copyrights, know-how, or patents for the resale use of products or services to end-users.” Our expert Lawyer focus on Drafting Franchise Agreement for businesses in order to secure your intellectual property rights.

So as we can understand Franchise Agreement in Cyprus, it is a license granted to a manufacturer, distributor, or trader to allow them to make or sell a certain product or service in a specific region for a specified length of time.

As there is not any specific Legislation related to Franchise Agreements in Cyprus, the subject is affected by various areas of law such as Contract Law, Competition Law and Intellectual Property.

Franchise Agreement Requirements

1) Register the Trademark

When it comes to franchise agreements in Cyprus, there are no specific prerequisites for their execution beyond the need for authorized signatures from both parties. Although not mandatory, a signed agreement by a witness adds credibility to the documentation.

Additionally, no court or government consent, authorization, approval, license, or order is required for signing and delivering a franchise agreement in Cyprus.

However it is highly suggested, Intellectual Property such as Trademarks or Patents, to be registered and officially recognized in Cyprus, before signing the Franchise Agreement. It is also recommended that a licensed trademark user register his rights with the Department of Intellectual Property. 

In this way, both parties to the Agreement are protected:

• The Franchisor protects its rights with respect to any licensed trademarks and their registration in the name of the Franchisee, not as a user but rather as an owner
• The Franchisee protects its rights as a user of trademark, copyright which is registered and have legal status, recognition and economic value

In an Cypriot Court Decision of 1999 it was ruled that if the User (Franchisee) of the Trademark, registers the Trademark with the Registrar, as its own, there is nothing illegal about it, if the Franchisee has not registered the Trademark before.

Tip: The franchisor should apply to the Registrar of Trade Marks to have the registered user of the trade marks recorded.

2) Stamp Duties

Stamp duties need to be paid when the Agreement is signed. An unstamped agreement will not be recognized as evidence in a Cyprus court or by a government institution like the Registry of Intellectual Property.

3) Terms of the Agreement

In this situation, it is critical that the terms incorporated in the agreement protect the interests of all parties involved by providing a clear understanding of their respective rights and duties in relation to:

1. What is the license given about
2. Pricing and Royalty payments
3. The duration of the contract
4. Breach of contract provisions
5. Termination of the contract
6. Disclosure and confidentiality 
7. Description of the Intellectual property rights
8. Liability
9. Territorial Rights
10. Governing law

Franchise Agreement Lawyers in Cyprus

• Provide consultation and planning of the Franchise
• Draft the Franchise Agreement
• Review a Franchise Agreement you consider signing
• Build your Franchise marketing campaign
• Negotiate the contract for you
• Register your Trademark