A foreign-brand franchise: company structure and the commercial-agency licence
Dealing in Iraq on a foreign brand described as a franchise is not reduced to a single contract that stands in for the form of the business before the Companies Registration Department and the Registrar of Companies. The first question is whether an Iraqi entity is to be formed, or a branch of a company formed outside Iraq is to be opened. A licence to use the mark, if one exists, is then read, as is a commercial-agency licence where Commercial Agency Regulation Law No. 79 of 2017 and Instructions No. 1 of 2020 apply. The frame is on company registration. Preparing the clauses of the contract is a path on the franchise-contract page. The agency licence is on its page.
Iraqi legislation, in the sources recorded for this page, does not set out a stand-alone franchise statute. The general rules of contract in the Civil Code remain in place, and a licence of the mark is read from Trademarks and Descriptions Law No. 21 of 1957, as amended.
The company form or a branch
If an Iraqi entity is chosen, the type of company — joint-stock, limited, or another type counted by Companies Law No. 21 of 1997, as amended — is read from articles 4 to 8, and from the company's purpose in its contract under article 13. Foreign membership in a joint-stock or limited company is read from article 12, including the Iraqi share of capital where the article states it. Legal personality of the company — other than a simple company — begins on the day the certificate of incorporation is issued, under article 22. The detail is on company forms.
If the foreign company keeps its entity abroad and wants activity in Iraq without forming an Iraqi company, the branch path is separate, on its page. One of those paths is not substituted for the other merely because the dealing is described as a franchise.
The mark and the agency licence
Article 18 bis of the Trademarks Law allows the owner to license one person or more to use the mark, without preventing the owner from using it unless otherwise agreed. Recording the licence in the trademarks register may assist in proof, and is discussed within the limits of the text, on the trademarks page.
If the description of a commercial agency applies to the agreement, the licence and the recording of the contract are read from Law No. 79 of 2017 and Instructions No. 1 of 2020, including the form “agency of the franchise holder” where the text of the instructions mentions it. That path is not inferred from the mere use of the word franchise in the title of the contract. It does not stand in for the company or branch structure, and it does not stand in for the page on drafting the clauses.
Amending the purpose or increasing capital, and distinguishing names
A general-assembly decision to amend the purpose or to increase capital, if expansion of the activity calls for it, is read from amending the contract. The company name before the Registrar is not the trade name and is not the mark, on the name page.
The Law Office of Ali Barakat follows this reading of the structure from Baghdad, al-Yarmouk.
Legal basis and sources
- Companies Law No. 21 of 1997
- Commercial Agency Regulation Law No. 79 of 2017
- Instructions on commercial agency work No. 1 of 2020
- Trademarks and Descriptions Law No. 21 of 1957
Frequently asked questions
Does drafting a franchise contract replace forming a company or obtaining an agency licence?
No. The drafting page deals with the clauses of the agreement in the light of the Civil Code and of a mark licence where that applies. The company or branch structure, and a commercial-agency licence where Law No. 79 of 2017 applies, are separate paths, each read on its own page.
Is every agreement styled a franchise a commercial agency?
The description is not inferred from the title alone. Commercial Agency Law applies when the agreement satisfies what that Law and the instructions require, including the form of a franchise holder if the text mentions it. The reading is taken from the texts, not from the commercial label of the contract.
Is a licence of the mark enough to register the company?
No. Licensing the mark is a path in the trademarks register. Forming an Iraqi company is a path before the Registrar under the Companies Law, and opening a branch is a third path. Each is read on its own page.
Does forming the company stand in for recording the mark or for a licence to use it?
No. Forming the company before the Registrar is one path, and recording the mark before the trademarks register is another, under Trademarks and Trade Descriptions Law No. 21 of 1957 as amended. A licence to use the mark, if it appears in a franchise arrangement, is read from the licence contract and from that Law. Neither stands in for registration of the company, or for an amendment of its purpose where expansion of the activity requires an amendment.
Related topics and articles
- 01Drafting a commercial franchise contractA franchise contract is read from the Civil Code, a trademark licence and the 2020 agency instructions, with no published standalone statute or templates.
- 02Obligations that recur after a company is recordedFinal accounts, the audit, the general-assembly meeting and copies sent to the Registrar, distinct from post-incorporation steps and from branch duties.
- 03The address of a company or branch, a lease and a title deedThe company's address in its contract, before the Registrar and in the commercial register; a lease or deed may evidence it. Not a real-estate page.
- 04Registering a company in Basra: which department is approached, and what differs from Baghdad?Registering a company when dealing in Basra under the federal Companies Law, followed from Baghdad.
- 05Company forms under the Iraqi Companies LawCompany types under Companies Law No. 21 of 1997 as amended: joint-stock, limited, partnership, simple, sole proprietorship and holding.