Franchising in Kyrgyzstan: Business Opportunities
- Why Kyrgyzstan?
- How Does Franchising Work in Kyrgyzstan?
- Franchise Agreement: What to Consider?
- Key Restrictions and Risks
- How Can a Franchise Agreement Be Terminated?
- Contact our lawyer to learn more
Franchising is one of the most popular ways to enter the Kyrgyz market and scale a business with minimal risks. With well-structured contractual regulations, entrepreneurs can use the franchising model for rapid growth and network expansion.
Why Kyrgyzstan?
- A growing market with a dynamic small and medium-sized business sector.
- Strategic geographic location — a bridge between Russia, China, and Central Asia.
- Business-friendly environment — government initiatives support entrepreneurship.
- Flexible tax system and preferential conditions for investors.
How Does Franchising Work in Kyrgyzstan?
Franchising is regulated by the Civil Code of the Kyrgyz Republic dated January 5, 1998. Essentially, it is a business license that allows for the transfer of:
- Trademarks and brands
- Patents and exclusive technologies
- Commercial information and business processes
Franchise Agreement: What to Consider?
- Must be concluded in written form
- Can be fixed-term or indefinite
- Only allowed between commercial entities or individual entrepreneurs
- Registration is required if intellectual property rights are transferred
- May include exclusive territorial rights and competition clauses
- Allows for various payment models (fixed fees, revenue percentage, product markup)
- Obligations of the Franchisor and Franchisee
What does the franchisor do?
- Transfers the business model and brand
- Provides training and ongoing support
- Supplies marketing materials and quality standards
What is expected from the franchisee?
- Maintain quality standards and brand culture
- Follow guidelines for store design and branding
- Provide additional services outlined in the franchise
- Ensure confidentiality of commercial information
Key Restrictions and Risks
Some terms acceptable in other countries may be considered invalid in Kyrgyzstan. For example:
- A franchisor cannot strictly control the pricing set by the franchisee.
- Customer or territorial restrictions may be challenged in court.
It is essential to develop a legal strategy in advance and carefully draft the agreement.
How to Minimize Risks?
- Include control and support mechanisms for franchisees in the agreement
- Conduct regular legal audits of the franchise network
- Consider local market specifics to adapt the franchise to Kyrgyzstan
How Can a Franchise Agreement Be Terminated?
- By mutual agreement or upon breach of contract
- By either party for indefinite agreements with six months' prior notice
- Upon the expiration of the exclusive intellectual property rights
- If franchise rights are transferred to a new owner, the contract continues under the new owner
- In case of the franchisor’s death, rights pass to their heir (if they are an entrepreneur)
Author of the publication: Saodat Shakirova, Partner at ARTE Law Firm
|
If you are interested in Kyrgyzstan as a business market, our lawyers are ready to assist you.
Contact our lawyer to learn more
Write to a LawyerAttention Journalists: Use of REVERA website materials in publications is only allowed with our written permission. To coordinate materials, please get in touch with us at: i.antonova@revera.legal, Telegram: https://t.me/PR_revera
