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fact sheet Guidelines for starting a franchise business Franchising has been a What is Franshising was approximately 300, the majority of well-established concept in Franchising means that someone who has which is of Swedish origin. Comprising Sweden since McDonalds first started his own company and has mana- some 15,000 franchise units, employing arrived in the 1970’s to spread ged to achieve a successful business will 100,000 persons, the total turnover of throughout the country. let one or more company owners use the Swedish franchising is approximately company name and the business concept USD 12 billion (2006). About half of the in exchange for some form of compensa- franchisees are active in retailing, however tion. It is a long-term cooperation between consulting and restaurants are also two business partners. The cooperation is common fields of business. regulated by the franchising law and by a franchising agreement signed by the two Top ten franchising systems in Sweden Company Number of franchise units parties. Franchising can be described as a Posten Sverige AB 2,800 sort of sale permission and it may be practi- Svenska Turistföreningen 309 ced almost within any sector where products Svenska McDonald’s 235 and/or services are being marketed. There- Sibylla/Nordic fastfood 229 fore franchising is not a business entity but JCA Aktiebolag 217 AB Svenska Pressbyrån 160 rather a way of doing business. Elkedjan 156 Färgtema 132 Characteristics Gröna Konsum 122 • The franchise agreement is set up bet- Tema Sportia AB 110 Electrolux Home Svenska AB 106 ween two independent parties, who will Däckteam 100 continue to be independent legally and economically. Source: Swedish Franchise Association • In the agreement the franchisor will grant the franchisee the right to use a company A large majority of franchising systems name, a trademark and a system. The has started since 1990, and the number is experience and know-how of the franchi- expected to increase in coming years. sor is often also offered to the franchisee’s disposal. The franchising law • The franchisee will commit himself to As of October 1, 2006 there is a specific the policy of the operation in order to Swedish franchise disclosure law. The law strengthen the picture of a group of stores contains provisions on the obligation of a with a standardized structure, quality and franchisor to give a prospective franchi- service. see certain information before a franchise • Normally the franchisee pays an “entry agreement is entered into. The law covers fee” and after that a royalty that is usually all franchise agreements in Sweden, both based on a percentage of the turnover. domestic and foreign, both Master Fran- chise Agreements and Unit Agreements, Franchising in Sweden both new agreements and renewal of old Please note that the contents of this fact sheet should be regarded as an overview of current con- At the beginning of 2006, the estimated agreements. ditions in Sweden. These may change and thereby number of franchising chains in Sweden render descriptions of laws and other frameworks inaccurate. In all individual cases we request that advice always be sought with relevant authorities, organizations and businesses on specific issues. Published in September 2007 Invest in Sweden Agency P.O. Box 90 SE-101 21 Stockholm, Sweden Phone: +46 8 402 78 00 Fax: +46 8 402 78 78 E-mail: firstname.lastname@example.org www.isa.se fact sheet For more detailed information please contact: Definition of franchise agreement 7. Information about the term of the A franchise agreement is according to this agreement, conditions for modification, Swedish Franchise Association law an agreement by which an entrepreneur prolongation and termination of the (Svenska Franchiseföreningen) Sofierogatan 3A, SE-412 54 Göteborg (the franchisor) agrees with someone else franchise agreement, as well as the Phone: + 46 31 40 55 10, Fax: + 46 31 81 10 72 (the franchisee) that the latter against economic consequences of termina- email@example.com compensation paid to the franchisor shall tion. www.franchiseforeningen.se use the special business idea of the fran- 8. Information on how a dispute as to the The Swedish Franchise Association promotes the franchising business concept and has chisor for the marketing and sale of goods agreement shall be tried and what shall approximately 100 member companies. or services. As further conditions for an apply as to the liability for the cost of agreement to be considered a franchise such a trial. Effectum Franchise Consulting agreement according to this law, is that the Vasagatan 11, SE-111 20 Stockholm Phone: +46 8 652 12 00, Fax: +46 156 17572 franchisee under agreement shall use the Other laws to be taken into consideration firstname.lastname@example.org distinctive trade marks and other intellectual when setting up a franchising business: www.effectumsweden.se property rights of the franchisor, as well as • The contract act Effectum is experienced in helping companies cooperate on the occasion of recurrent con- • Intellectual property legislation and organizations to develop their franchising business. trols of the observance of the agreement. • The agency act • The competition act Franchise Group AB Obligation of the franchisor to inform Danderydsgatan 11, SE-114 26 Stockholm In reasonable time before a franchise Registration of a company Phone: +46 8 464 75 00, Fax: +46 8 349 325 agreement is entered into, a franchisor shall In order to carry out the franchising business email@example.com www.franchisegroup.se in writing give the franchisee the informa- the franchisee has to register a company. Franchise Group is Sweden’s leading consulting tion that is needed in consideration of the The legal company form, such as limited firm within franchising. circumstances with respect to the implica- liability company or trading company is tions of the agreement and other conditions. often stipulated in the agreement. The FranchiseNet i Skandinavien AB Sofierogatan 3A, SE-412 51 Göteborg The information shall be clear and under- procedures for starting a company are the Phone: +46 31 40 72 00 standable. It shall at least contain: same for the franchisee as for others. firstname.lastname@example.org www.franchisenet.net 1. A description of the franchise activity FranchiseNet is a link between franchisers and franchisees. The website contains that the franchisee is to run. information about franchise-related issues. 2. Information on other franchisees with which the franchisor has concluded an Advizor agreement within the same franchise Kungsgatan 50, SE-111 35 Stockholm Phone: +46 8 410 646 00 system and the scope of their activity. email@example.com 3. Information on the compensation that www.advizor.se the franchisee shall pay the franchisor Advizor has experienced consultants assisting and other economic conditions for the business chains in the retail and service sectors. franchise activity. Advokatfirman NOVA 4. Information on the intellectual property Contact: Anders Fernlund rights that will be granted the franchi- Grev Turegatan 14, SE-114 46 Stockholm see. Phone +46 8 566 366 00 5. Information on the goods or services that firstname.lastname@example.org www.nova.se the franchisee is obliged to buy or rent. 6. Information on the prohibition to com- MAQS Law Firm pete that will apply during or after the Contact: Mango Kask time for which the franchise agreement Box 7009 SE-103 86 Stockholm will last. Phone +46 8 407 09 00 email@example.com www.maqs.com Invest in Sweden Agency, ISA, attracts and facilitates foreign direct investment in Sweden. Responsible to the Ministry 2 (2) for Foreign Affairs, ISA informs about Swedish advantages and assists foreign companies with facts, advice and contacts when considering setting up business in Sweden. ISA cooperates with a national and international network.
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