Licensing, franchising and royalties in Uzbekistan

A licence agreement gives a business permission to use intellectual property (Art. 1036 CC); a franchise provides a package of rights and commercial experience. The agreement determines remuneration. Franchise registration takes one working day, while licences for individual assets follow separate procedures. This article covers contractual requirements and accounting under National Accounting Standards (NAS).

At a glance:

• Unless the agreement states otherwise, a licence is non-exclusive (Art. 1036 CC).
• A franchise includes a package of exclusive rights (Art. 862 CC) and use of the licensor’s reputation and experience.
• Recurring payments for use are period expenses; a fixed one-time payment is a prepaid expense.
• The scope of rights, registration and remuneration terms determine what the business receives and what it pays for.

Updated: 16 September 2026

Types of licence

The right holder permits another party to use an asset, retaining rights to the extent provided by the agreement. Using another party’s protected asset requires the right holder’s permission (Art. 1034 CC). Acquiring an exclusive right and obtaining permission to use it are different transactions: an assignment agreement must identify the rights being transferred (Art. 1035 CC).

The Civil Code (CC) distinguishes the following types of licence (Art. 1036 CC):

This is the general rule. An author’s agreement granting exclusive rights allows use in the specified manner and within the agreed limits only by the recipient (Art. 38 Copyright Law). An exclusivity clause therefore needs to be read against the type of asset concerned, rather than copied from an agreement covering a different asset.

A sublicence allows the licensee to grant use to a third party. It is permitted only where the main agreement provides for it. As a general rule, the licensee is accountable to the licensor for the sublicensee’s actions, although the agreement may provide otherwise. These conditions form part of the licence rules cited above.

This article concerns the right holder’s permission to use intellectual property. Government authorisations for particular business activities are covered in the article on business licences. That article helps identify requirements applying to the business operated under a franchise.

Required terms of a licence agreement

The agreement must specify the rights, limits and period of use (Art. 1036 CC). A licence is presumed to be granted for remuneration. In a working agreement, these terms are expressed through the asset description, permitted uses, territory, duration, licence type, remuneration calculation and permission to sublicense. A patent or certificate number connects the terms to a particular protected asset.

A trademark licence must include a quality condition and monitoring (Art. 30 Trademark Law): the licensee’s goods must be of a standard no lower than the licensor’s goods, and the licensor must monitor compliance. A collective mark and the right to use it cannot be transferred to others.

An author’s agreement must specify permitted uses and remuneration (Art. 39 Copyright Law), how remuneration is determined for each use, and the payment procedure and dates. Rights not listed are not treated as transferred. If no territory is specified, use is limited to Uzbekistan; if no term is specified, the author may terminate after five years by giving six months’ written notice. Where a fixed amount is paid for publication or another use covered by the provision, the agreement must specify a maximum number of copies.

An author’s agreement must be in writing (Art. 42 Copyright Law), except where the law provides otherwise. When copies of software or databases are sold, properly setting out the terms of use on the copies also satisfies the written-form requirement.

For a transfer of economic rights in software or a database, the written agreement must specifically set out the scope and methods of use (Art. 7 Software Protection Law), the amount and payment procedure for remuneration, and the agreement’s duration. These mandatory terms must be checked even where registration of the licence itself is voluntary.

Know-how requires a separate description of the information disclosed and access to it. The licensee must protect confidentiality (Art. 1097 CC); as a general rule, this obligation continues after termination while the information remains undisclosed. The agreement may provide a different arrangement within the limits established by law.

Registering a licence agreement

Whether registration is compulsory depends on the asset. Licences and sublicences for inventions, utility models and industrial designs require written form and registration (Art. 1089 CC). Trademark licences also require written form and registration (Art. 1106 CC). Failure to comply with the prescribed requirements makes the agreement invalid.

Registration of an assignment or licence covering computer software or a database is voluntary by agreement between the parties (paragraph 5 of the regulation). Registration of an author’s agreement or a trade-name licence is unnecessary where no procedure exists (paragraph 21 of Plenum Resolution No. 19). This does not remove the requirement to register the franchise agreement itself.

The applicable contract-registration regulation was approved by Cabinet of Ministers Resolution No. 427 of 10 July 2025. The service is provided by the Ministry of Justice. Residents apply through a public services centre, the Ministry’s special information system or the Unified Interactive Public Services Portal (the Portal); nonresidents apply through the information system. Subsequent steps take place in that system.

The application may be joint or submitted by one party. A single-party applicant attaches one of the following documents in PDF: a notice of disposal of the exclusive right signed by both parties, the agreement, or an extract from it. Evidence of legal succession is added where necessary, and a power of attorney where a representative applies. A sublicence requires proof of authority to sublicense: the main agreement, an extract or a letter of consent.

The application or supporting document identifies the parties, the subject matter by patent, certificate or international trademark registration number, and the type of rights transfer. A licence additionally specifies its scope, territory and duration. Documents in another language must be accompanied by a translation into the state language.

Review takes fifteen days from receipt. A request to remedy deficiencies suspends the review period; the applicant must respond within three months of the request being sent. A compliant agreement is entered in the register, and the applicant receives notice of its number and date. Noncompliant documents or failure to provide a complete, timely response result in refusal of registration.

Changes to the parties, subject matter, duration, territory or scope of rights also require registration. The application is accompanied by the amendment agreement or an extract and, where necessary, evidence of succession and a power of attorney. An extension application must be filed during the agreement’s term or within three months after it expires.

Licence registration fees

The applicant pays a patent fee under the Law on State Duty. Current amounts depend on the asset, the number of protection documents, and whether the applicant is an individual or a legal entity. One BRV is the base calculation unit; the monetary amounts in the table are updated automatically on the website.

The table gives selected licence registration rates from the schedule to the Law. It covers trademarks and patents for technical solutions, rather than every type of patent-related action.

Example. A legal entity registers one agreement covering two trademarks. The fee is UZS 2.640.000 for the first mark and UZS 880.000 for the additional mark: 2.640.000 + 880.000 = UZS 3.520.000. This is a registration expense, separate from remuneration payable to the right holder under the agreement.

This calculation concerns registration of a licence for an already protected mark. Initial registration, classes of goods and services, the protection period and infringement remedies are covered in the article on trademarks. It is relevant where the right holder is still obtaining protection for the brand.

The package of rights in a franchise

The CC calls a franchise agreement a comprehensive business licence agreement. Its subject is a package of licensed rights (Art. 862 CC): use of the licensor’s trade name and protected commercial information, together with any other exclusive rights specified in the agreement, such as a trademark, service mark or invention.

The agreement covers use of the licensor’s business reputation and commercial experience within an agreed scope and field of activity. It may specify a territory or leave it unspecified and may have a fixed or indefinite term. Parties may be commercial organisations and individuals registered as entrepreneurs. A promise to provide a “brand” alone does not explain the rights being acquired: each component of the package needs to be described in the transaction terms.

Remuneration may take various contractual forms (Art. 865 CC): a fixed one-time payment, recurring payments, a share of revenue, a markup on the wholesale price of goods supplied for resale, or another agreed form. An “initial franchise fee” generally describes a one-time payment; its accounting treatment depends on the right paid for.

A comprehensive business sublicence is possible where the main agreement authorises it. The agreement may also require an agreed number of sublicences to be granted. Termination of the main franchise (Art. 864 CC) terminates the comprehensive business sublicence.

Registering a franchise agreement

A franchise requires a written agreement and registration (Art. 863 CC); noncompliance makes it invalid. Under the regulation approved by Cabinet of Ministers Resolution No. 346 of 24 June 2022, registration and amendments are handled by public services centres through the automated business registration system. The licensor, licensee or a representative may apply, either in person or through the Portal.

Initial registration requires the following documents in PDF:

• the franchise agreement;
• for a foreign licensor, an extract from its country’s state register or a replacement document;
• where someone applies under a power of attorney, a document confirming the representative’s authority.

Registration of material amendments requires a copy of the amendments, a copy of the court decision if it is their basis, and evidence of the representative’s authority where applicable. Documents outside the prescribed list cannot be demanded. The submitted documents are subject to a notarised translation requirement into the state language or Russian.

The applicant pays one third of a BRV when applying. Through the Portal, the charge is 90 percent of that amount, or UZS 132.000. The same arrangement applies to re-registration. Registration of amendments based on a judicial act and reconsideration of documents under the prescribed procedure are exempt from the charge.

Example. Online application: 440.000 ÷ 3 × 90% = UZS 132.000. The applicant pays when applying. If the franchise includes a trademark licence requiring registration, the corresponding patent fee is calculated separately.

A decision is made within one working day. Successful registration produces a certificate bearing a QR code. Grounds for refusal are an application by an improper right holder or user, incomplete or deliberately false documents or information, documents inconsistent with legislation, or absence of a permit or licence required for the activity. These are the grounds listed in the regulation.

The charge is not refunded after refusal. Paragraph 17 allows deficiencies to be corrected and resubmission within three months without another charge. The attached notification form still states a different period, five working days; this is a discrepancy between the form and paragraph 17, rather than an additional registration period.

Where the law requires registration of a licence for an asset within the franchise, that part of the agreement must also be registered with Justice authorities. The franchise registration certificate does not itself replace that procedure.

What counts as royalties for tax purposes

The Tax Code (TC) treats payments for intangible asset use (Art. 44 TC), or the right of use, as royalties. This covers copyright, software, databases, patents, trademarks, technology and information about industrial, commercial or scientific experience. The name given to a payment in the agreement does not replace this classification.

The same article expressly excludes payments for:

1. End-user use of software within its functional purpose, including configuration through built-in features, with copying limited to what is necessary for that use.
2. Acquisition of goods, including information media, incorporating the relevant intellectual property.
3. Software and database development, installation, improvement, configuration, adaptation and modification.
4. Newly obtained industrial, commercial or scientific information resulting from services under a customer agreement.
5. Rights to distribute copies of software without reproduction rights, or with reproduction limited to end-user use.

The practical implication is that software access, software development and granting reproduction rights require separate analysis. Similarly, an initial franchise payment needs to be matched to the rights, goods or actions for which it is charged.

This article covers classification and accounting entries. The article on corporate income tax explains the tax base and deductions, while nonresident withholding tax covers withholding when paying a foreign right holder. These questions arise when calculating the amount to transfer, separately from accruing royalty expenses or income.

Royalty accounting for the licensee

Accounting under NAS starts with the substance of the right acquired. Where an asset is provided for use, the licensee records it off balance sheet at contractual value (paragraph 61 of NAS 7). Payment for a licence does not, by itself, mean that the licensee has acquired its own intangible asset.

Payments for use fall into two accounting categories (paragraph 61 of NAS 7):

• recurring payments accrued and paid under the contractual procedure are expenses of the reporting period;
• a fixed one-time payment is recognised as a prepaid expense and charged to the relevant reporting periods over the agreement’s term.

Acquisition of an intangible asset in its own right requires all recognition criteria (paragraph 6 of NAS 7): no physical form; use in business for more than twelve months; a cost of at least fifty BRV unless management sets a lower threshold; no intention to resell; documents establishing the asset and exclusive right; and identifiability. Calling an agreement an “exclusive licence” therefore does not settle balance-sheet recognition without analysis of the rights acquired.

Accrued royalties payable are recorded in account 6930 (paragraph 300 of NAS 21): the account is credited against the relevant expense account. Separate analytical records are maintained for each creditor. The expense account depends on the purpose of use; there is no single entry appropriate to every business.

Example. Assume the agreement sets monthly royalties at 3% of revenue. With revenue of UZS 200,000,000, the accrual is 200,000,000 × 3% = UZS 6,000,000: debit the relevant expense account and credit 6930. The 3% is an assumed contractual rate, not a statutory rate. If a separate twelve-month right of use costs UZS 24,000,000 and is charged evenly over the term, the monthly expense is 24,000,000 ÷ 12 = UZS 2,000,000.

Royalty accounting for the licensor

Granting use while retaining the exclusive right does not remove the intangible asset from the balance sheet (paragraph 60 of NAS 7). Amortisation continues to be charged by the organisation holding the right. A sale of the exclusive right itself requires analysis as a different transaction.

Income is recognised where economic benefits are likely to flow to the organisation and the amount can be measured reliably (paragraph 23 of NAS 2). Income is accrued under the agreement’s terms (paragraph 24 of NAS 2), rather than automatically when money arrives. Receiving a one-time payment does not, by itself, determine the period in which the entire amount is recognised.

The accrual entry is debit 4850 and credit 9510 (paragraph 414 of NAS 21): royalties receivable and royalty income. Receipt of payment debits the relevant bank account and credits 4850; this correspondence appears in the standard.

Example. For the month in the example above, the licensor recognises UZS 6,000,000 by debiting 4850 and crediting 9510. Receipt into a current account in national currency is recorded as debit 5110, credit 4850. The example shows accrual and settlement without tax withholding or value added tax (VAT); those calculations depend on the parties’ status and the transaction terms.

Obligations of the franchise parties

The licensee performs the obligations of the package user (Art. 867 CC), taking account of the nature and characteristics of its business:

• use the trade name in the agreed manner;
• ensure that goods, work and services match the standard of comparable products supplied by the licensor;
• follow instructions on using the rights, including the appearance of premises;
• provide the additional customer services that buyers could expect from the licensor;
• keep manufacturing secrets and confidential commercial information confidential;
• grant the agreed number of sublicences where expressly required by the agreement;
• clearly inform customers that the identifying signs are used under a comprehensive business licence.

The licensor has its own set of obligations (Art. 866 CC): provide technical and commercial documentation and necessary information, instruct the licensee and its staff, issue and properly formalise the agreed licences, and provide continuing technical and advisory assistance, including training and professional development. The agreement may add further obligations.

For claims about deficient quality, the licensor bears subsidiary liability (Art. 869 CC). Where a claim is brought against the licensee as a manufacturer of the licensor’s products, the parties are jointly and severally liable.

The agreement may contain restrictive conditions (Art. 868 CC): territorial exclusivity, non-competition with the licensor, refusal of competitors’ franchises, and approval of the location and appearance of premises. These examples are not exhaustive; conditions may be invalidated if they conflict with competition law. Clauses allowing the licensor to set resale prices or price limits, or restricting customers exclusively to a particular category or location within the contractual territory, are invalid.

What changed in 2025–2026

• Resolution 840, 30 December 2025, published on 6 January 2026, updated the franchise registration certificate form. It provides separate details for the licensee and licensor, including the personal identification number of an individual (PINFL).
• Resolution 375, 9 July 2026, published on 13 July 2026, revised application channels for registering intellectual property agreements: residents may also apply through public services centres. The current procedure should be read together with its updated application forms.

Amending or terminating a franchise

Franchise amendments take effect when registered (Art. 870 CC). Either party may withdraw from an indefinite agreement by giving six months’ notice (Art. 871 CC), unless the agreement requires a longer period. Early termination of a fixed-term agreement and termination of an indefinite agreement require registration. Loss of the trade-name right without its replacement terminates the agreement.

Transfer of an individual right to a new owner preserves the agreement (Art. 872 CC) in the relevant part. If an individual entrepreneur acting as licensor dies, the heir must already be registered as an entrepreneur or register within six months after the succession opens; otherwise, the agreement terminates.

If the licensor changes its trade name, the licensee may seek termination or, if the agreement continues, a proportionate reduction in remuneration (Art. 873 CC). If another exclusive right ends, the agreement normally continues without that right, with a reduction in remuneration available unless the agreement provides otherwise (Art. 874 CC). For the user, this links future payments to the rights actually remaining in the package.

Frequently asked questions

Can a trademark be used as soon as the licence is signed?

A trademark licence requires written form and state registration (Art. 1106 CC). The parties’ signatures do not replace the registration requirement. Where the mark forms part of a franchise, franchise registration and trademark licence registration must be checked separately. Paying an initial fee, training staff or receiving a brand manual does not, by itself, demonstrate that these procedures have been completed.

Does an exclusive licence always prevent the licensor’s own use?

No. The CC’s general rule preserves the licensor’s own use (Art. 1036 CC), while excluding the right to license others. Copyright is subject to the special rules explained above. The answer therefore depends on the asset and the agreement’s substance. Territory, permitted uses and the scope of the rights granted must be read together with the exclusivity clause.

Must a one-time franchise fee be recognised as an intangible asset?

A one-time payment for a granted right of use is recognised as a prepaid expense (paragraph 61 of NAS 7) and charged over the agreement’s term. The asset received for use is recorded off balance sheet. Acquisition of an asset in its own right is assessed against the intangible asset recognition criteria. The accountant therefore needs the rights and payment terms, rather than only an invoice labelled “franchise”.

Does buying software count as a royalty payment?

Not always. The TC excludes end-user software use (Art. 44 TC) where use is confined to the software’s functional purpose and copying is limited to what that use requires. Separate exclusions cover development, configuration and distribution of copies. Granting commercial reproduction rights requires a different assessment: the rights granted must be read and compared with the article’s conditions.

Can a foreign company act as a franchise licensor?

The regulation expressly provides for documents for a foreign licensor: an extract from the relevant country’s state register or replacement documents. Requirements concerning the franchise package, formalisation and registration still apply. Payments to a foreign right holder also require tax classification; recording a royalty accrual does not, by itself, determine the withholding amount when payment is made.