Franchise agreements in Uzbekistan: the two registrations or no franchise

In 2024 a Tashkent bakery chain sold a franchise to an entrepreneur in Bukhara: a 90,000,000 UZS lump-sum fee, 6% royalty on turnover, the right to the trademark, the recipes, the store fit-out standards. They signed, and they carefully registered the IP part with the Intellectual Property Center. A year later the franchisee stopped paying and pointed out that the franchise agreement had never been registered with the franchisor's state registrar — which, under the Civil Code, means it is not treated as concluded. The chain went to court and discovered the franchisee was right: registering the trademark licence at the IP Center closes only one of two mandatory registrations. The second — registration of the franchise agreement itself — nobody had done, because everyone assumed "we registered at the IP Center, so we're covered." This article is about the two registrations without which a franchise does not legally exist in Uzbekistan, and about the liability a rights holder takes on the moment they call their contract a franchise.

A franchise in Uzbekistan is not a standalone law

Uzbekistan has no dedicated franchising law. What founders call a "franchise" is governed by the Civil Code chapter on the comprehensive business licence (franchising) — that is the contract's actual name in Uzbek law. Neighbouring CIS jurisdictions call the same instrument a "commercial concession agreement"; Uzbekistan's Code uses "comprehensive business licence." The substance is identical: for a fee, the rights holder grants the user a bundle of exclusive rights for use in business.

The word "bundle" is doing all the work here. A plain trademark licence transfers one right — to use the mark. A franchise transfers a package: the mark, the commercial designation, protected commercial information (know-how, recipes, standards), goodwill, and a system for running the business. Precisely because a franchise carries more than the mark, it is registered differently and creates more duties — including the rights holder's liability for what the franchisee does under their brand.

How a franchise differs from a trademark licence

The line between a licence and a franchise is not a formality; it is a fork that decides registration, tax, and liability.

A trademark licence is permission to use the mark within agreed limits. The licensee puts your mark on their goods and pays a royalty. They are not obliged to copy your business process, and you do not answer for the quality of what they make, except through the quality-control clause in the contract itself. We covered pure licensing in our piece on the trademark licence agreement.

A franchise transfers a working business model whole. The franchisee does not merely use the mark — they reproduce your format: the same menu, the same interior, the same processes, the same service standards. A customer walking into the franchisee's outlet cannot tell it apart from the rights holder's own, and that is the entire point. But out of that indistinguishability grows the key consequence: the rights holder answers to the customer for the franchisee's quality, because to the customer it is one and the same brand.

If the contract grants only the right to the mark, it is a licence — registered once, at the IP Center. If it grants the mark plus know-how plus standards plus the commercial designation, it is a franchise — and the registrations become two. The most expensive opening mistake is to call the deal a "franchise" in marketing, draft it as a licence in the legal department, and register it as a franchise nowhere.

Two registrations — the main trap

A franchise agreement in Uzbekistan goes through two independent registrations, and each closes its own risk. Skipping either one breaks the deal in its own way.

Registering the IP part at the IP Center. The part of the agreement that concerns exclusive rights to the trademark is registered at the Intellectual Property Center at the Ministry of Justice — exactly like an ordinary licence. Under the Law "On Trademarks, Service Marks and Appellations of Origin" this registration is mandatory. Without it, the IP part — and, if its terms are inseparable from the rest, the whole agreement — is treated as not concluded and void. The IP Center's review takes up to one month, in practice three to six weeks once you account for documents returned to fix wording.

Registering the franchise agreement with the state registrar. The agreement itself, as a comprehensive business licence, is registered with the state body that registered the rights holder (through the public-services system). This one is faster — the statutory target is within three working days. Without it the franchise is not treated as concluded as against third parties, which is exactly where the bakery in the opening lost.

Why you need both at once: the IP Center confirms the franchisee lawfully uses the mark (protection at customs, against infringers, against a non-use cancellation claim). The state registrar confirms a franchise exists between the parties at all. Close only the first and you have a registered licence inside an unconcluded contract. Close only the second and you have a registered contract whose IP part is void — a franchise with no right to the mark.

It is not only the agreement that registers: material amendments and termination do too. Change the royalty, add a NICE class, widen the territory, and that is a fresh registration action in whichever registry the changed terms touch.

Liability for the franchisee — what a plain licence never carries

This is the part rights holders learn last and pay for most. By calling the deal a franchise, the rights holder takes on liability for the goods and services the franchisee sells under their brand.

• Subsidiary liability. For claims about the non-conformity of goods (works, services) sold by the franchisee, the rights holder is liable on a subsidiary basis. The customer first claims against the franchisee, and if the franchisee does not satisfy the claim, it passes to the rights holder. A brand shared by two means a wallet partly shared by two.
• Joint liability. If the rights holder is itself the manufacturer of the product the franchisee resells, liability rises to joint — the customer may claim directly against the rights holder without waiting for the franchisee to refuse.

The practical upshot: quality control in a franchise is not a box-ticking clause, as it sometimes is in a licence — it is direct protection of your own pocket. If the franchisee poisons a customer with expired ingredients, you answer too. So in a franchise, the standards, the inspections, and the right to shut an outlet immediately on a critical breach are not bureaucracy — they are insurance. Where the protected know-how passed to the franchisee actually sits, and how to keep it from leaking to a former partner, is covered in our piece on trade secrets.

What the agreement must contain

Without these terms the IP Center or the state registrar will return the agreement, and a court may later find it not concluded:

1. Parties — full details of rights holder and user; for a foreign rights holder, an extract from the commercial register of the country of incorporation with apostille or legalisation.
2. Bundle of rights — the trademark certificate number, NICE classes and the specific goods/services; the commercial designation; a schedule of the know-how and standards transferred (as annexes).
3. Remuneration — a lump sum, royalties (fixed, a percentage of turnover, a mark-up on the wholesale price) or another form; the Code does not restrict the method. Billing period, currency, bank details.
4. Territory and term — Uzbekistan in full or by region; term fixed or indefinite. A franchise term cannot outlive the trademark registration — on renewal of the mark, the franchise is re-registered too.
5. Quality control — documented standards, a right of inspection, consequences up to shutting an outlet. Given subsidiary liability, this is the rights holder's most important block.
6. Sub-franchising — permitted or barred; the franchisee's scope to grant sub-franchises is set by the agreement.
7. Know-how protection — confidentiality, a ban on use after termination, non-compete.
8. Grounds and procedure for termination — non-payment, breach of standards, loss of the mark by the rights holder, unilateral exit for an indefinite agreement.

Form is written, usually in three signed copies, with no corrections, erasures or strike-throughs — the registrar will not accept such a copy.

Sub-franchising: a master franchisee by region

If the rights holder does not want to deal with every outlet directly, they grant a master franchisee the right to issue sub-franchises in their region. A sub-franchise is allowed only if the main agreement expressly provides for it, and each sub-contract goes through the same two registrations. The point to remember: a sub-franchise terminates automatically when the main franchise terminates. If the rights holder ends the deal with the master franchisee, every sub-franchise it issued is left hanging — and dozens of outlets lose the right to the mark at once. So the main agreement with the master franchisee builds in a mechanism that moves sub-franchisees directly to the rights holder on early termination.

What it costs and how long it takes

Two registration actions, two fees:

• Registering the franchise agreement with the state registrar — about a third of the base calculation value (BCV), on the order of 130,000–140,000 UZS, within three working days.
• Registering the IP part (the trademark licence) at the IP Center — about 5 BCV, which at current rates falls in the 1,700,000–2,000,000 UZS bracket; higher for deals with foreign participation. Up to one month by statute.

On top of the fees come the patent attorney's services: for a foreign rights holder, filing at the IP Center through an accredited representative is mandatory. The full turnkey budget for launching one franchise with legal support is on the order of 4,000,000–7,000,000 UZS for a resident and 2,000–3,500 USD for a foreign rights holder, not counting the lump-sum fee itself and the cost of packaging the franchise.

On tax: for a foreign rights holder, royalties are subject to 20% withholding, reduced by a double-tax treaty where a tax-residency certificate for the same year is in hand. We covered that mechanism in detail in our piece on the licence agreement — it works the same for a franchise.

And the first precondition for all of the above: the mark must be registered. A franchise cannot be built on a filed-but-unregistered application — there is no exclusive right yet, so there is nothing to licence. If you do not have the mark yet, start with registering the trademark and build the franchise on the certificate.

In short

• A franchise in Uzbekistan is the Civil Code chapter on the comprehensive business licence (franchising); there is no standalone law.
• Two registrations: the IP part at the IP Center (about 5 BCV, up to a month) and the agreement itself with the rights holder's state registrar (about 1/3 BCV, within three working days).
• Miss the IP Center and the IP part — often the whole deal — is void. Miss the agreement registration and the franchise is not concluded as against third parties.
• The rights holder answers for the franchisee's quality: subsidiary always, joint if they are the manufacturer.
• Quality control in a franchise protects not the brand but the rights holder's wallet.
• A sub-franchise ends with the main franchise — build in a move of sub-franchisees to the rights holder.
• A franchise cannot be built on an unregistered mark.

FAQ

How does a franchise agreement differ from a trademark licence? A licence transfers one right — to use the mark. A franchise transfers a bundle: the mark, the commercial designation, know-how, standards, the business system. A licence is registered once (at the IP Center), a franchise twice (the IP Center and the state registrar). A franchise creates rights-holder liability for the franchisee; a plain licence does not.

Can I register only at the IP Center and skip the franchise agreement? No. That closes only the IP risk. Without registering the agreement itself with the state registrar, the franchise is not treated as concluded as against third parties — and a bad-faith franchisee will use that in the first dispute.

Does the franchisor answer for goods the franchisee sells? Yes. For non-conformity claims, on a subsidiary basis. If the franchisor manufactured the product the franchisee resells, jointly. This is the main difference from a plain licence and the reason quality control is mandatory.

What happens to sub-franchisees if I terminate the master franchisee? Every sub-franchise terminates automatically. To keep outlets from losing the right to the mark, the main agreement builds in an automatic move of sub-franchisees directly to the rights holder.

Do amendments to a franchise agreement need registering? Yes. Material amendments and termination are registered just like the agreement itself, in whichever registry the changed terms touch. Change the royalty or the territory — register it.

Can I launch a franchise on a brand still at application stage? No. Until the mark is registered there is no exclusive right and nothing to licence. You can sign a preliminary agreement taking effect once the certificate issues.

How long can a franchise agreement run? Fixed term or indefinite. But the franchise term cannot exceed the trademark registration; on renewal of the mark for the next ten years the franchise is re-registered.

A franchise is the most powerful way to scale a brand in Uzbekistan, and the most demanding to paper: two registrations, liability for someone else's acts, protection of know-how. A signed but under-registered agreement is worse than none — it gives both sides the false sense that a franchise exists, right up to the day one of them decides to test it. If you are launching a franchise or buying one and are not sure both registrations are in place, PACT's trademark lawyers will check the package and bring it to a state where it works.