The Supreme Court reviewed a case in which the franchisee under a commercial concession agreement paid the franchisor an initial fee of 800,000 rubles but never received the trademark, business manuals, standards, instructions, or access to the network materials. He sent a letter demanding that the obligations be fulfilled or the fee refunded. After receiving no response, he brought a claim seeking termination of the agreement and recovery of the amount paid.

Three judicial instances rejected the claim, finding that the franchisor had fulfilled its obligations. They relied on a clause of the contract in which the parties acknowledged that the documentation had been transferred at the time of signing.

The Supreme Court overturned these decisions. It held that actual contractual performance cannot be replaced with formal statements in the text. Courts must determine whether the trademark, know-how, instructions, standards and other materials required by the agreement were, in fact, delivered. The case file contained no evidence of real transfer: no delivery acts, no proof of document dispatch, no logins or passwords to access the franchisor’s internal resources, and no information on training.

The Court also stressed that the right to use a trademark is a key element of a commercial concession agreement. If the trademark is not registered, the franchisor’s obligations are considered unfulfilled, and the grant of rights is deemed not to have occurred. In this case, Rospatent refused to register the trademark, which the lower courts failed to take into account.

The Supreme Court noted that the franchisor must prove the actual transfer of the entire set of exclusive rights—not merely individual elements and not only documentation. Since this had not been established, the findings of proper performance were erroneous. The case was remanded for a new review.

Maria Milyukova, PhD in Law and attorney at Timofeev, Vahrenwald & Partners, commented for Advokatskaya Gazeta that the Supreme Court underscored the inadmissibility of a purely formal approach. According to her, proper performance of a commercial concession agreement is only possible when the full set of exclusive rights is actually provided in the agreed volume and confirmed by sufficient evidence, not merely by contract wording. She emphasised that the absence of a registered trademark effectively eliminates the subject matter of the concession agreement: without it, the relationship cannot arise at all. Milyukova added that courts traditionally examine a broad set of evidence of actual transfer—delivery acts, access credentials, proof of training, records of using the rights in business—and do not rely solely on literal interpretation of the agreement.

In her view, the Supreme Court’s ruling highlights that franchisors must ensure proper documentary proof of real transfer of rights and materials; otherwise, they risk claims for contract termination and refund of the franchise fee.

“Advokatskaya Gazeta” (Russian Advocacy Newspaper) is the official body of the Russian Federal Bar Association (published since 2007). The Newspaper’s publications are devoted to the most important legal topics, case law, as well as legal practice and issues of advocacy.

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