In the Czech Republic, the franchising business has started quite recently.

 Unlike in the Czech Republic, where a franchise legal framework is lacking, “franchise agreements” (or franchise agreements) are not regulated by law. Such agreements are entered into by parties that are required to abide by the Civil Code and contract law's general rules. There are no foreseeable future legislative actions which will influence the Czech franchise industry. Licensing, purchase, lease, and agent agreements are commonplace in franchise agreements, while intellectual property and competition laws are always stringent in franchise business relationships. There have been no recent Supreme Court rulings on franchising, however. Only decisions made by the Office for the Protection of Competition in the Czech Republic will be addressed in this article. the pearl doha

generally standard features of a franchise

In the absence of an established franchise legal framework, the Czech courts and the Office for the Protection of Competition (the “Office”) are left with the difficult task of formulating regulations to define and determine what activities or agreements fall under the franchise and trade mark laws. These definitions belong to the “franchising” classification. The basic feature of a franchise business in the Czech Republic is further defined using the analysis of these definitions.

It is one of the most distinctive features of the relationship that it is focused on profit. Because the franchise is to re-sell goods or provide services, the franchise is granted with fairly specific parameters. The franchise agreement stipulates the terms and conditions under which the franchisee will be granted rights and obligations. In addition to these rights and obligations, franchises and license agreements differ. To get the most out of your franchise, here are the rights that you receive: to use the trademark or brand of the franchisor, use the intellectual property and industrial rights of the franchisor, and utilize the support services offered by the franchisor, which include centralized assistance (e.g. marketing). An implication of the franchisee's acceptance of various obligations is that these commitments compel the franchisee to use the franchisor's trade name or brand in a prescribed manner, to apply their own knowledge or intellectual property rights or industrial rights as prescribed, and, usually, to pay the franchisor a fee on a periodic basis. Under this franchise agreement, two independent entrepreneurs agree to enter into a partnership. The European Franchise Federation emphasizes that both individuals are completely separate from each other.

Competition Office of the Czech Republic's Bureau for Franchising Decisions

Despite EU laws having a direct influence on the Office's practices, the information can be found even in the decisions prior to the Czech Republic joining the EU. When in doubt, look to the European Court of Justice (ECJ) and the European Commission (EC), both of which support the Office's decisions (which is, however, absent). Additionally, some of these decisions are noteworthy, as the Office is believed to have provided assistance in answering several important competition law issues that are relevant to franchises, and we believe these are vital for franchise businesses in the Czech market.

To reach the essential elements of franchise chain management, on the one hand, the franchisor shares its knowledge and offers assistance to franchisees, and on the other, individual franchisees must also share their know-how with each other. However, they enable the franchisor to take the necessary measures to preserve the franchise chain's identity and reputation. Since it is required to safeguard the core franchise chain operation, this model and related provisions fall outside the scope of anticompetitive agreements

It is, however, in this decision of the Office that the remark that some franchise agreements may be found to be anticompetitive is made (referring to an ECJ ruling of January 28, 1986, C-161/84, Pronuptia, ECLI:EU:C:1986:41). The franchise model, however, is not immune from competition law.

In this case, the decision had already been confirmed, as the Office no. S 88/04, from 28 July 2004, decided the same thing (Temposervis, a.s.). The Office found a violation of the competition law in a practice it found under a franchise agreement, which provided a bonus scheme for a franchisee who followed recommended prices. The price recommendations, maximum re-selling prices, and bonus incentive provided to franchisees were all found to be in compliance with Czech competition law, but they were found to be anticompetitive because of the franchisee's bonus incentive, and thus consumers may have been harmed. In indirect price-fixing practices, Microsoft interprets this as hard-core restriction of competition.

The franchising model is best described as one in which two independent entrepreneurs cooperate extremely closely. There may be legal issues if the collaboration intensifies into a hostile rivalry. The Office grants protection to know-how transfers while strictly prohibiting any direct or indirect price-fixing.