Sweden

Franchise regulation

The Swedish Franchise Disclosure Act imposes disclosure requirements on franchisors.

Pre-contractual disclosure requirements

Statute requires the franchisor to disclose certain information in due time before the agreement is signed (“due time” will depend on the circumstances, but is generally no less than 14 days).

The general disclosure requirement provides that the franchisor shall provide the franchisee information about the implications of the agreement and such other factors that are needed in consideration of the circumstances. There are also a minimum of 8 specific items to be disclosed:

• a description of the franchise activity that the franchisee is to engage in;
• information on the other franchisees with which the franchisor has concluded an agreement within the same franchise system and the volume (scope) of their activity;
• information on the compensation that the franchisee shall pay the franchisor and other economic conditions for the franchise activity;
• information on the intellectual property rights that will be granted;
• information on the goods or services that the franchisee is obliged to buy or rent;
• information on non-completion undertakings that shall apply during or after the termination of the franchise agreement;
• information about the terms of the agreement, conditions for modification, prolongation and termination of the franchise agreement as well as the economic consequences of termination; and
• information regarding how a dispute under the agreement shall be settled and the liability for costs of such a settlement.

If the franchisor fails to give information, the prospective franchisee may obtain an injunction at the Swedish Patent and Market Court where an injunction could be combined with an imposition of a fine.

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Contact Gabriel Lidman - gabriel.lidman@twobirds.com or Joel Tholin - Joel.Tholin@twobirds.com