represents the right to utilize the business model or brand of an already established company for a certain time frame. For the franchisor, the franchise represents an alternative to making chain stores to distribute products which does not require investing and the liability of a chain. The franchisee has a greater motivation to succeed than a direct employee, since he or she has a direct stake in the business. In this article, our Estonian company formation consultants
cover a few important aspects related to starting a franchise in Estonia
Franchising agreements in Estonia
Franchising in Estonia
is effectuated under the concept of vertical restraint. The types of vertical restraints, except for exclusive supply and non-competition commitment, are not definite in the antitrust legislation in the country.
This concept is based on the EU regulations. When it comes to franchising in Estonia, under a franchise agreement, one party enables the other one to exploit the franchisor’s trademarks and expertise for sale and distribution of services or products.
The legal sources which outline the antitrust law applicable to vertical restraints in Estonia are:
• The Competition Act;
• The Penal Code, Division 7;
• The Government of Republic Regulations No. 195 of 18 June 2002;
• The Government of Republic Regulation No. 130 of 26 April 2004.
The Law of Obligations Act in Estonia
Franchise agreements in Estonia are concluded according to the Law of Obligations Act.
According to this act, a contract can be entered by an offer which is made and accepted or by the mutual exchange of declarations of intent in any other form if it is clear enough that both parties have reached an agreement.
After accepting an offer, the contract is concluded when the acceptance reaches the party which is the offeror.
In case certain terms have to be agreed upon after the agreement of the parties or at the request of one of the parties, the contract will not be concluded until these terms have been reached, unless specified by the law.
Our company registration
specialists in Cyprus
can offer all the necessary details on the Law of Obligations Act.
For further information about starting a franchise business in Estonia
, please speak
to our friendly company formation
agents in Estonia