The East Europe Franchise Association - A Comprehensive resource for effective franchise business in East & Central Europe.

East and Central Europe Market Intelligence

Legal Country Overviews
These are legal overviews of key CEE countries.

Lithuania

The flag of Overview:
Legal regulation of franchising relations

Starting from 2001 the main piece of national legislation directly regulating legal relations of franchising in Lithuania is the Civil Code of the Republic of Lithuania (hereinafter CC LR). Franchise-related provisions can also be found in legislative acts on competition, intellectual property and taxation.

Lithuanian legislation does not provide a definition of franchise therefore understanding of the concept is based on international practice of good will which defines it as a specific contractual license under which one individual (franchisor) grants another individual (franchisee) a right to use, on a temporary basis, a package of industrial and intellectual property rights belonging to him. According to CC LR under a contract of franchise one party (franchisor) shall take an obligation to grant to the other party (franchisee) for remuneration for a certain period or without specifying the period the right to use in the business activity of the franchisee a complex of exclusive rights which belong to the franchisor (right to the firm name, right to the trade or service mark, right to protected commercial (industrial) information, etc.), while the other party shall be obliged to pay for that the remuneration determined in the contract. A contract of franchise shall provide for the use of a complex of exclusive rights, business reputation and commercial experience of the franchisor to a determined extent (by establishing the minimum and maximum amount of use or any other form). A contract of franchise may also determine the territory of use applicable to such exclusive rights, business reputation or commercial experience, or the commercial activity within which it will be used (sale of goods, rendering of services, etc.).

Effective national legislation also provides for a possibility of sub-franchising. National legislation covers only individual aspects of the content of franchise contracts; it leaves a great deal of freedom for parties to determine their contractual liabilities. Te main requirements which apply to such contracts: written form, remuneration basis and compulsory registration in a specific national register (or registers).

General income tax of 15 % applies to franchise revenue.

Legal Aspects of Franchising prepared by International Law Firm VARUL

For a much more in-depth view of franchising in Lithuania and Latvia, please download the following PDFs:

1. "Buying a Franchise - Highway to Business Success" - PDF (4.9Mb)
2. "Study Report On Franchising Attractiveness Of Lithuanian And Latvian Border Regions" - PDF (2.8Mb)
Published By: Lithuanian Franchise Centre

 

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