Discusses opportunities for U.S. franchisers and legal requirements in the market.
Last Published: 7/22/2019

The interest in franchising in Sweden continues to grow, according to the Swedish Franchise Association, which estimates that about 800 franchise companies are in operation in Sweden (2017). Their annual survey shows that these are run by an estimated 34,000 franchisees (2017) employing more than 144,000 people.  According to the same survey, franchising is especially popular in the area of retail (mainly durable goods), hotels and restaurants, and the service sector (such as assembly/installation and consulting/business services). The majority of franchises are of Swedish origin. Among the most well-known American franchises operating in Sweden are mcDonald’s, Burger King, Pizza Hut, Hard Rock Café, Subway, Starbucks, KFC, Domino’s Pizza, Avis, Hertz, Mail Boxes etc, Re/Max and 7-Eleven.
To meet the needs of the Swedish market, U.S. franchisers should be prepared to modify their product mix or implement other changes in their marketing policy in order to boost competitiveness. Launching large-scale franchise operations may not be realistic in a market the size of Sweden’s. According to industry contacts, it can also be challenging for master franchisors to secure financing for American franchises, especially when the exchange rate is unfavorably high.

There is no specific comprehensive franchise legislation in Sweden. The only direct franchise-related legislation is a disclosure obligation for the franchisor (Law no 2006:484). Under the Swedish Franchise Disclosure Act, a franchisor must provide a prospective franchisee with certain information before a franchise contract is entered into. The legislation covers all franchise contracts in Sweden: domestic and foreign contracts; master franchise contracts and unit contracts; new contracts; and renewals of old contracts. It is strongly recommended that U.S. companies considering franchising in Sweden conduct a qualified legal study to ensure full validity and enforcement of franchising agreements. The use of an American franchising agreement without adjustments for Swedish laws and practices could be detrimental to the franchiser’s business.

There are a number of laws that govern the operation of franchises within the EU, but these laws are fairly broad and generally do not constrain the competitive position of U.S. businesses. Detailed information on EU regulations can be found on the website of the European Franchise Federation.
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.