Franchising in Egypt
By Shaimaa Solaiman
November 28, 2011
Franchising is known in Egypt during 70s in different sectors such as: soft drinks, petrol stations, food etc…
What does a Franchise agreement mean?
A Franchise Agreement is an agreement by virtue of which, the franchisor transfers to the franchisee, in return for a fee, a certain business including but not limited to (trademarks, logo, trade secrets, technology, models, recipes ...etc….).
What does the technology mean?
Technology means; a group of information that is related to the application of a scientific theory or invention (Know- how).
What does know-how mean?
Know-how means technical data, formulae, standards, technical information, specifications, processes, methods, code books, raw materials, as well as all information, knowledge, assistance, trade practices and secrets, and any improvements thereto.
Due to the important role that the technology transfer transactions play in the production process and the local economy, the Egyptian legislator regulates the issue of technology transfer in Articles from 72 to 87 of the Egyptian Commercial Code No. 17/1999.
The most important points that should be taken into consideration while transferring technology to Egypt:
1. The agreement shall be subject to the Egyptian Law. According to Article 72 of the Egyptian Commercial Code, the provisions of the Egyptian Law shall be applied to any international or local agreements related to technology transfer; regardless of the nationality of the parties thereto. Furthermore, the provisions of the Egyptian Law shall be applied to any transfer of technology whether concluded in a separate agreement or as a part of any other agreement
The technology transfer agreement should be in writing, otherwise, the agreement shall be null and void.
3. The Know- how elements should be clearly stated in the Agreement or in annexes to be attached to the Agreement and be an integral and complementary part thereof.
4. Any conditions that might restrict the technology importer's liberty to use or develop the technology may be revoked; such as obliging the importer of the technology to accept the improvements that have been made to the technology by the supplier of the technology……..etc. …..
5. The supplier of the technology shall be obliged to inform the importer in the agreement or during the negotiations that took place prior to concluding the agreement of the following:
(a) The risks that might arise from using the technology as well as the methods to avoid such risks.
(b) The lawsuits and any other obstacles that might hinder the usage of the technology.
(c) The provisions of the local law that are related to supplying the technology.
6. The supplier shall be obliged to inform the importer of any improvements that have been to the technology during the term of the agreement. Furthermore, the supplier shall be obliged to transfer such improvements to the importer upon the latter's request in return for a fee.
7. The supplier, during the term of the agreement, shall be obliged to provide the importer, upon the latter's request, with the spare parts he produces and that are necessary for the operating of the equipment and machines of the importer. If the supplier does not produce such spare parts, he should inform the importer of the sources where they are available.
8. The supplier shall not disclose any information relates to the improvements that have been made to the technology by the importer which is transferred to him by virtue of a condition in the agreement.
9. The importer of the technology may not assign the technology to third party without obtaining the written approval of the supplier prior to such assignment.
10. The importer shall be obliged to inform the supplier of provisions of the local law that are related to importing the technology.
11. The importer shall not disclose the information related to the technology or the improvements that have been thereto.
12. Any dispute related to technology transfer shall be subject to the jurisdiction of the Egyptian courts and according to the Egyptian Laws. Any agreement to the contrary shall be null and void.
13. Finally, The parties may agree to refer any dispute related to technology transfer to the arbitration to be held in Egypt and in accordance with the Egyptian Laws.
Ms. Solaiman, is the Managing Partner of Challenge Law Firm. Graduated from faculty of Law, Cairo University in 1999, and Masters Degree in 2001.
Admitted to the Egyptian Bar in 2001, before establishing Challenge Law Firm, Ms. Solaiman was practicing law in a multination law firm for approximately ten years. Ms. Solaiman is specialized in Civil Law, Corporate Law, and Labor Law, drafting contracts, Immigration Laws and Intellectual Property laws.