Office Bulgaria / Sofia
Oborishte Str. 1 - BG-1504 Sofia
Tel.: +359 (0)2 846 80 46, 489 08 67

International Office Germany / Hamburg
Mattentwiete 8 - D-20457 Hamburg
Tel.: + 49 (0) 40 / 41 46 45 - 0

Commercial & Trade Law

Commercial lawyers in Bulgaria

COELER LEGAL specialises in commercial and trade matters, especially in border crossing transactions. Our clients are from all brances of industry, e.g. machine building and steel industry, pharmaceutical, aviation and logistics, renewable and other energies as well as financial services.

We work on projects and as permanent legal advisors. Typical services are inter alia

  • drafting, negotiating and checking trade and supply agreements
  • advising on the most appropriate form of investment (type of company etc.)
  • establishing of all types of commercial companies
  • drafting, negotiating and checking all types of commercial agreements such as franchising, agency, leasing, license, guarantee or other service agreements
  • aasisting in joint ventures
  • M & A transaction / due diligence studies
  • securing performance and payments in international agreements
  • assisting in insolvency and liquidation proceedings
  • checking companies / good standing
  • ADR, mediation, litigation & arbitration

Special focus: Franchising in Bulgaria

The Bulgarian legal framework is very accommodating to foreign franchises. Currently, there are no franchise laws or specific regulations pertaining to this business model. In general, no specific registration or government approval is required in order to establish a franchise enterprise. Franchisors must comply with the provisions of the Bulgarian Commerce Law. No restrictions are imposed on repatriation of earnings, capital, royalties, or interest. Intellectual property rights are recognized and protected.

The following general legal rules and regulations apply to franchising in Bulgaria:

  • the Trade Act containing provisions relating to licensing contracts and general principles of trade deals
  • the Obligations and Contracts Act
  • the copyright and Trademark laws
  • the Corporate Revenue Taxation Act
  • the Individuals Revenue Taxation Act
  • the VAT Act

The Investment Promotion Act was designed to encourage foreign investment. The act stipulates equal treatment of foreign and domestic investors and creates conditions for improved administrative services. It further includes an investments incentive package and encourages implementation of investment projects over a period of up to three years. It is this law that explicitly recognizes intellectual properties and securities as a foreign investment.
U.S. franchisors are further protected by the U.S.-Bulgaria Bilateral Investment Treaty from 1994. It includes obligations to U.S. investors such as national treatment and most favored nation status, the right to make financial transfers freely and without delay, international law standards for expropriation and compensation, and access to binding international arbitration.
The Bulgarian government has established the infrastructure necessary to provide adequate and effective protection of intellectual property. Bulgarian law protects the acquisition and disposition of property rights. All intellectual property laws are harmonized with EU legislation, the Agreement on Trade-Related Aspects of Intellectual Property Rights, and other international acts. Bulgaria is a member of the World Intellectual Property Organization and a signatory of the Paris Convention for the Protection of Intellectual Property. All intellectual property of any of the Paris Convention treaty?s 171 contracting states, including the United States and most European countries, is equally recognized, protected and accessible domestically and abroad.
The registration of trademarks, trade services and all intellectual property is filed with the Bulgarian Patent and Trademark Office. The Council of Intellectual Property Protection, which is a part of the Bulgarian Ministry of Culture, coordinates intellectual property protection and enforcement. The Bulgarian Commerce Law grants the exclusive right for a trade name to be used only by the merchant who has registered it. In case of infringement, the interested party is free to seek an injunction, as well as damages.
The Bulgarian Commerce Law also mandates that procurators, agents, assistants and representatives protect trade secrets and their good name as merchants. Business methods can be kept as a commercial and production secret under the Law on Protection of the Competition.
Despite the presence of a good legal base, the country?s judicial system is one of the major obstacles to developing international business. It is generally ineffective and weakens investor confidence in the courts? ability to enforce successfully the law. Corruption in the administration and government bureaucracy are also common and may slow down business start-up and operations. Organized crime additionally raises insecurity. Other areas cited by international businesses as necessary to facilitate conducting business in Bulgaria are improved creditor rights through improvements to bankruptcy law and procedures, and improved accounting standards and risk assessment.

Franchise brands in Bulgaria
The market for international franchise brands in Bulgaria is uncluttered. In their search for better value, Bulgarian buyers are very receptive to Western goods and services. With the opening of the borders and increasing financial independence, Bulgarians are extending their travels abroad and developing more cosmopolitan tastes.  Consumers are frequently exposed to Western trade names resulting in a high level of awareness and trust in them. In addition, many foreigners are visiting or moving to Bulgaria, bringing with them a knowledge and demand for franchised brands.

Today franchising is present in many different industry sectors, including beverages, cosmetics, education, fast food, gas retail, hotels, and real estate brokerage. Among the most popular international franchisors with a firm presence in the Bulgarian market are Arexim, Bally, Benetton, Berlitz, Best Western, Century 21, Dunkin? Donuts, Engel & Völckers, ERA, GNC, Golden Tulip, Hertz and Avis, Hill International, Hilton, KFC, McClean, McDonald?s, Monsieur Bricolage, NEOSET, OMV, Pizza Hut, Radisson, Remax, Shell, Sheraton, Snelling Staffing, Superstore USA, Office 1, PMC Management, VAPIANO and Wilson Learning. Bulgarian-founded franchise systems have also emerged on the market. Policontact, a Bulgarian franchisor, is in the employment services industry. Happy, another Bulgarian franchisor, is the largest restaurant chain in the country. Today, Happy operates more than 20 domestic and several international outlets.
Franchise professionals indicate that best prospects for franchisors in the country are in the automotive products and services, hotels, laundry and dry cleaning, and restaurants divisions. Good opportunities also exist in convenience stores, ice cream and yogurt, hardware stores, and specialized retail stores. Further promising options are baked goods, candy, equipment rental centers, eye care, and snacks. Currently, the U.S. Commercial Service office is working on franchise projects in the automotive, architectural and educational sectors.
No Bulgarian financial institutions are specialized in financing franchise development. However, banks, EU programs and special funds that support small and medium-sized business also provide credit financing for franchise projects. The Bulgarian Franchise Association offers guidance on financing opportunities.
Forms of Franchising
All forms of franchising can be applied in Bulgaria. No specific requirements or restrictions exist for the entry of a foreign franchisor. The prevailing methods employed are direct (unit) franchising, master franchising, regional development, joint venture, and establishing affiliates. Due to the relatively small size of the Bulgarian market, franchisors usually grant master franchises for the region, the Balkans or Eastern/South-eastern Europe. Currently most outlets are company-owned or owned by a foreign master franchisor. For example, KFC and Dunkin? Donuts are owned and managed by Samex, a Bulgarian-Greek company; Pizza Hut is financed by Holland Capitals.

COELER LEGAL is highly specialised and experienced in franchise law matters. We have accompanied some of the leading franchise companies into the Bulgarian market. Please do not hesitate to contact us and send us your request or legal issue for reviewal. We will immediately give you our first assessment of the case without any charge.

Contact: Dr. Frank Schmitz