Franchise Business by B_Gjas


									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: 
                                                                                                                                                    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-             
compensation paid to the franchisor shall                         tion.                                         
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
distinctive trade marks and other intellectual              when setting up a franchising business:             
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
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      
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.              
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.
3.    Information on the compensation that                                                                      
      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                                                                 
      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

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.

To top