Insufficient use of franchising is one of the major factors hampering the development of services in Russia. Main problems of franchising in Russia concentrate currently in the legislative and legal spheres. There is no specific law on franchising in the domestic legislation system. Russia is substantially behind the U.S. and Europe, so far as laws and operating practices related to franchising are concerned. Urgent adjustments are needed for current legislation in Russia, first of all to bring it in line with accepted standards of franchising in the West, particularly relating to theprotection of franchisers and franchisee.