Franchise agreements – disclosure obligations, royalties and key terms
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Short answer: A franchise agreement should regulate how the franchisee may use the business concept, trademark, and know-how, what fees are to be paid, what support the franchisor must provide, quality requirements, territory, marketing, control, competition issues, and how the partnership is terminated. Furthermore, the franchisor has a statutory disclosure obligation prior to the agreement.
| Pre-contractual disclosure | The franchisor must, well in advance of the agreement, provide written, clear, and comprehensible information in accordance with Act (2006:484). |
| The franchise agreement | Regulates rights, obligations, fees, operations, control, IP, and termination. |
| Operations manual/policies | Describes ongoing standards and practical work methods but must interact with the agreement. |
Disclosure obligation before the agreement
The Franchise Disclosure Act (2006:484) requires the franchisor, well in advance of the conclusion of the agreement, to provide written information about the meaning of the agreement and other relevant circumstances. The information must be clear and comprehensible, and the law specifies a number of minimum points.
Fees and financial terms
Franchise agreements often contain an initial fee, ongoing royalties, and contributions to joint marketing. The agreement should specify the basis for calculation, reporting, payment dates, auditing, and what happens in the event of late or incorrect reporting.
Trademark and know-how
The franchisee is typically granted a limited right to use the franchisor's marks and business system. Regulate which rights are granted, how material may be used, what applies to domain names and social media, and what must cease immediately when the agreement is terminated.
Territory and exclusivity
If the franchisee is granted an exclusive territory, the agreement needs to define the area and which sales channels are included. E-commerce and digital marketing can otherwise create demarcation problems. Competition law must be taken into account in the event of far-reaching restrictions.
Control and quality requirements
- requirements for premises, assortment, and customer experience,
- training and ongoing support,
- reporting of key performance indicators,
- auditing and inspection,
- handling of customer data and GDPR,
- action plan for deviations.
Termination of the agreement
Regulate the contract period, renewal, ordinary termination, and grounds for cancellation. It should also state what happens with signage, trademarks, customer registers, inventory, websites, and confidential information after termination.
Franchise Agreement 2026/2027 + disclosure
The template package contains Swedish and English agreement versions as well as documentation for the franchisor's pre-contractual disclosure.
FAQ
Is there a specific franchise law in Sweden?
There is a specific law regarding the franchisor's pre-contractual disclosure obligation. The franchise agreement itself is also affected by general contract law, intellectual property law, and competition law.
Must the pre-contractual disclosure be in writing?
Yes. The law states that the franchisor must provide written information that is clear and comprehensible.
Can the franchisee be prohibited from competing?
Non-compete clauses must be assessed carefully. Freedom of contract is limited by Swedish and EU competition law.
This article provides general information and does not replace individual legal advice. Regulations, collective agreements, industry terms, and the circumstances of the individual case may affect the assessment.
