Franchise in Ukraine – what is it – how does this business work?

Main points

• A franchise allows buyers to run a business under someone else's brand, using the brand's name, technology, and reputation.
• Franchise buyers pay royalties, which are calculated as a percentage of sales or set at a fixed amount.

What is a franchise and how is it profitable / Photo Unsplash

A franchise is a business that is always best prepared for economic jumps and competition. In particular, it is a profitable own business with a high level of stability.

What is a franchise?

So, a franchise is a contract signed by the business owner and a third party, as explained on the OLX website.

The buyer thus has a legitimate opportunity to open his own business, but always under the supervision of the seller.

But the buyer uses:

• brand name;
• its technology;
• various equipment;
• brand reputation, etc.

That is, a franchise grants the right to run a business under someone else's brand. In particular, the buyer periodically pays for the use of intellectual property. Such payments are called “royalties.”

They are calculated as a percentage of sales or set a fixed amount,
– explained in the text.

Interesting! “Franchising” is regulated by Articles 1115 – 1129 of Chapter 76 of the Civil Code of Ukraine and is called “commercial concession”.

Franchising is divided into three types:

1. Commodity or product franchising involves the supply of finished products.
2. Production – the franchisee receives the right to manufacture and sell goods using specific technologies.
3. Business – the right is also granted to the business structure with its licenses and operating principles.

Franchising has many advantages:

1. Risk reduction – there is immediate planning of costs and profits, and there is no need for market analysis.
2. Reputation – the target audience already knows about the brand, there is no need to build an image from scratch.
3. The business model already exists.
4. Payback – no more calculations, monitoring, etc. required.
5. Lending privileges – it is easy to get a loan for this type of business.
6. Support from the franchisor – the owner is interested in support and provides maximum assistance.

However, there are also disadvantages:

1. The hard limits of the contract are hard.
2. Lump sum or initial contribution.
3. Dependence on the owner.

The franchisor may provide a list of suppliers in advance, which you may not always agree with. The location for the point is also discussed. Depending on the area, the rental cost may increase,
– the material says.

Pay attention! Franchise Group has provided examples of successful franchises. Among such businesses in Ukraine are “Français.ua”, “Sheriff”, and NAI.

What else should you know about doing business in Ukraine?

• The oldest business in Ukraine is the Drohobych Salt Plant. It has been operating continuously since the 14th century in the same place. The business is located in the Lviv region.

• The companies D.Trading LLC, NNEGC Energoatom, and ATB-Market LLC earned the most money in 2025. The amount of earnings is 292.4 billion hryvnias, 254.7 billion hryvnias, and 247.3 billion hryvnias, respectively.