A team franchise agreement — the model formed in the North American professional leagues, where a league licenses a team's brand and operations — has no form defined by statute in Georgia, and this needs to be said plainly: an analogue of the North American franchise system does not exist in Georgian law. What the Law on Sport provides is the organizational frame on which a franchise-like deal rests: the freedom of non-state sports organizations, the federation's sole governance, the club's legal status and the form of the professional league. The deal itself is written under general law. On this page we explain this distinction.
Non-State Sports Organizations — the Starting Freedom
Article 8 of the law builds the organizational starting point of the sports sector: a public or other non-state sports organization is a sports federation, association, club or other union that aims at the development of sport. The state promotes the development of these organizations' activity and attracts them into the governance of sport; where necessary, the ministry, within its competence, may transfer individual powers to them and control their exercise. This means that sports organizations operate with freedom — they may conclude deals the law does not directly regulate, provided they do not contradict other norms. It is on this freedom that the Georgian possibility of a franchise-like construction stands: an organization guides its activity by this law and the other normative acts operative in the sports sphere, and within this frame it freely chooses the form of deal that best serves the development of its activity.
The Federation and the Club — the Parties to the Deal
At the center of a franchise-like relationship stand two subjects. One is the national sports federation of Georgia: a non-commercial legal entity of private law created on the basis of the Civil Code, the sole governing body in the respective sport, answerable for its development, representing it inside and outside the country and meeting the requirements of the international federation. The other is the sports club, which conducts its activity under the law, the legislation in force and its own statutes, is a legal entity, and receives its status on the basis of the founding documents of an organization satisfying the requirements of the legislation and the federation. The preferential right of the club's leadership is to present its members for transfer with the consent of the national federation — in a franchise-like deal this norm determines that elements connected with players can be resolved lawfully only within this frame. The federation's internal order is informative as well: its supreme organ is the assembly, at least three quarters of whose members must be represented by sports organizations, and its president must be a citizen of Georgia with higher education and high reputation and without a conviction; the federation fulfils the state order and cooperates with the ministry on a contractual basis. Knowing these details matters at the preparation stage, so that the investor understands with whom, and within which rules, the deal is made.