International Franchise Lawyers Association e.V.
 
 
Franchising in Lithuania
 
For further details please contact:

Jerņeva, Jūlija
 

Vilgerts Lawfirm

Vesetas str. 7

LV 1013 Riga

Latvia

Phone +371 67 32 00 00

Fax +371 67 32 00 65

www.vilgerts.com

julija.jerneva@vilgerts.com

 

In Lithuania franchising agreements are regulated in a quite detailed manner by the Civil Code of 2001. Following is a short overview about some provisions of the Civil Code:

Form of agreement. According to the Civil Code franchising agreement must be concluded in writing. Failure to comply with the requirement of written form renders franchising agreement null and void.

Registration of franchising agreement. Franchising agreement may be invoked against third party only if the fact of forming the agreement is registered in the register of legal persons in which the franchiser is registered.  If franchiser is registered in a foreign state, the fact of forming franchising agreement must be registered in the same register of legal persons where the franchisee is registered. Where the subject matter of a franchising agreement is an object protected in accordance with patent legislation, the fact of forming a franchising agreement must be registered in accordance with the procedure established by laws in the relevant institution effectuating registration of objects of industrial property rights and the rights thereto.

Sub franchising. Sub franchise agreements are expressly regulated by the Civil Code. Some of the provisions concerning the sub franchising agreements are self evident, like a provision according to which sub franchising agreement cannot be concluded for a longer period that the main agreement. More relevant is a provision about liability: Unless otherwise agreed, the franchisee shall bear subsidiary liability towards the franchiser for the actions committed by the sub franchisees.

Non competition. According to the Civil Code the parties may provide only such conditions for limiting the competition which are not prohibited by the competition law.

Liability. With regard to claims brought to franchisee as the manufacturer of the goods, the franchiser shall be jointly and severally liable with the franchisee.

Termination of franchising agreement. Each party to a franchising agreement concluded for an indefinite period of time shall have a right to terminate at any time the agreement having notified the other party thereof six months in advance unless a more extended notification period has been established in the agreement.

Renewal of franchising agreement. The franchisee who has duly performed his duties under franchising agreement shall have a right upon the expiry of term of franchising agreement to conclude a new agreement for a new term on the same conditions. The franchisor shall have a right to refuse formation of franchising agreement for a new term on condition that within three years from the date of expiry of the contract term he shall not conclude an analogous franchising agreement with other persons which would extend over the same territory on which the terminated agreement operated. If before the expiry of the three year time limit the franchiser wishes to grant the same exclusive rights to other persons, he shall be obliged to propose formation of a new agreement to the franchisee or compensate the damages incurred by him. When concluding a new agreement, the conditions thereof may not be more onerous for the franchisee than the conditions of the previous agreement.

Death of franchiser or franchisee. In the event of death of franchiser or franchisee, their rights and duties under franchising agreement shall pass to the heir on condition that he is an entrepreneur and continues the business or starts the business within six months from the date of opening the inheritance. Otherwise, franchising agreement shall terminate. The effectuation of the rights and performance of the duties of the deceased under the franchising agreement before the acceptance of these rights and duties by the heir shall be executed by the property administrator appointed by the court. 

Other. The Civil Code contains also provision, amongst others about the limitations of the rights of the parties, change of conditions of franchising agreement and remuneration.