Start a Franchise Business in Liechtenstein
Start a Franchise Business in LiechtensteinUpdated on Monday 14th October 2019
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Investors who want to do business in the country can start a franchise business in Liechtenstein. This is a suitable option because it allows investors to use a business model that has already had success and has a tested and proved market strategy and approach.
Opening a franchise business is done by concluding an agreement between the franchisor and the franchisee. One of our lawyers in Liechtenstein can help you explore your options and determine the suitable business type and the business field in which to look for franchising opportunities.
The franchisor and the franchisee
The franchisor and the franchisee are the two parties that conclude a franchising agreement. The franchisor is the one who offers their rights, intellectual property and business know-how for sale while the franchisee is the one purchasing these rights.
The relationship, rights and obligations are determined as per the franchising agreement. The one buying the rights undertakes to establish the business as per the instructions of the franchisors and, in some cases, the agreement may limit the number of locations in which the franchisee may open the business.
Some of the rights transferred through a franchising agreement include:
- the business model: tried and tested, proved in other locations;
- the trademark or trademarks;
- trading support.
The franchisee undertakes to manage the new location as per the requirements and business model and control the activities that take place at the said location.
Our attorneys in Liechtenstein can give you complete details about the relationship between the franchisor and the franchisee, their rights and liabilities.
We invite you to watch the following video on the advantages of starting a franchise business:
Franchising opportunities in Liechtenstein
Investors who want to start a franchise business in Liechtenstein can begin by exploring one or more business fields. Depending on their desired location, type of company and industry, investors will find that they have several options to choose from.
Some examples include the following:
- - Restaurant: restaurants with different cuisines, such as burger restaurants or sushi places as well as other food establishments.
- - Coffee: coffee franchises are popular and they can specialize in selling premium coffee blends and specialty blends.
- - Beauty: spas, beauty salons, hair color specialists, permanent hair removal and beauty treatments.
- - Travel: tourist and leisure experiences that can offer different types of packages, such as luxury holidays focused on art and culture in Europe.
- - Learning: education and learning for children and adults; can include various educational programs and curriculums.
Of course, these are just some ideas for industries that offer different types of franchising options. Others may include cleaning services, retail, and health care as well as fitness. Investors who wish to explore the opportunities in a given business field can reach out to our team of lawyers in Liechtenstein for complete information on the laws governing certain fields.
The franchise agreement
A standard franchise agreement includes a number of standard clauses. Our team of attorneys in Liechtenstein lists these below:
- the grant: the right to use the trademarks, logos, and system of operation for the determined period; this does not offer ownership over these.
- conditions: the territory limitations that may apply, the manner in which the unit will be built, the design as well as the manner of opening the unit.
- equipment: a separate section may be used to describe the type of equipment that is to be used by the unit.
- fees: the franchise fee (the one payable upon opening the franchise as well as the one applicable during the use of the franchise).
- marketing: a section containing information about the advertising and/or marketing obligations that the franchisee will adhere to.
- renewal: the duration of the franchise agreement as well as the renewal process.
- training: if applicable, the types of training offered by the franchisor with respect to the staff (can include seminars, additional training, etc.)
- others: the agreement shall also include other clauses such as dispute resolution, limitations on damages, insurance as well as others.
Investors should keep in mind that the franchise agreement does not have a standard form and that the terms and the clauses differ from one franchise system to another. They can also depend on the business field in which the franchise activates and the degree of expertise transferred from the franchisor to the franchisee as well as the level of protection for the proprietary information and other intellectual property. Another important issue to remember is that the license is only temporary and the franchisor can place certain limitations on the franchisee’s right to use the proprietary information. The Intellectual Property clause is one of the most important ones in a franchise agreement.
In some cases, for selected business fields, the franchise agreement can also include restrictions on the sources of the products and services. In this case, the franchisor may allow the franchisee to only request services and goods from approved vendors. When this is the case, a list of such vendors will be provided. Another type of restriction will, in most cases, refer to the types of items or goods sold by the franchise itself. The franchisor will usually regulate the types of goods that can be sold within a unit. Any restrictions are to be expressly laid out in the agreement.
Should you require additional assistance, one of our lawyers in Liechtenstein can help you search by franchise business type or industry-specific opportunities.
Franchising is a popular manner in which large, international companies have expanded to the European market. According to Franchise Direct Top 100 Global Award 2018, the following statistics applied to franchises:
- - the franchise with the largest number of units: 7-Eleven with 62,105 units;
- - the average number of units for a franchise included in the Top 100: 5,492;
- - the median number of units: 2,090.
- - the United States has the largest franchise market, however, 57% of the franchise systems in the US have 50 or fewer locations.
- - franchises with less than 100 units comprise 71% of the franchise system in the US.
As seen from the statistics in the field, the food sector is one that continues to grow and is easily accessible. Testimonies to this are the franchises with the largest number of units in the top 100, McDonald’s KFC and Burger King.
Investors who wish to open a food franchise in Liechtenstein can reach out to one of our lawyers for complete information on the laws that govern different business fields. We can also provide details on the policies of the Ministry for Infrastructure, Economic Affairs and Sport, namely the Department for Economic Affairs.
Contact the experts at our law firm in Liechtenstein for more details on franchising and the opportunities for foreign investors in the country.