Franchising refers to a business mode whereby one entity (the franchisor) grants an independent operator the right to use the franchisor’s business method and practices. This can include the right to distribute products manufactured by the franchisor, using the franchisor’s trade mark and obtain training and other supports such as international and national advertising.
Franchising has become a popular method for oversees companies seeking to enter the Iranian market whilst retaining control over their brand. There is however, no specific law regarding the franchising in Iran. The relationship between the parties is governed by the terms of the franchise agreement, The Commercial Code of Iran and general contract rules in Iranian Civil Code.
There are also some multiple laws which may apply to franchising in Iran. Those laws include import and export regulations, labor law, social security regulations, taxations, foreign national entry, resident and work permit regulations, banking and insurance regulations and etc.
As franchise agreements are common modes of exploiting an intellectual property right such as trademarks, signs, copyrights, knowhow and patent rights, therefore the laws for protection of intellectual property ( International and local laws ) are applied as well applied to the franchising agreements in Iran. The code of commerce of 1932, The Islamic panel code of 1996 and the law on civil liability of 1960 also are applied to franchise agreement.
Our law firm helps companies expand their businesses to Iran by franchising. We draft franchising agreement and distribution documents for our clients. We also provide a legal advice to our clients on whether or not the terms and conditions of their franchising agreement are enforceable with regard to the Iranian law or not.