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Set Up a Franchise Business in Luxembourg

Set Up a Franchise Business in Luxembourg

Luxembourg is one of the most appealing European countries to start a business in. Foreign businessmen who want to open companies in Luxembourg can now choose between several industries apart from the financial one, as the government has invested a lot in the development of other economic sectors in order to make to country accessible to all types of investors.

For those interested in setting up a venture which does not imply the setup of a company from scratch, the franchise is one of the best options available in Luxembourg. The rich population here is attracted by the famous brands and those who want to represent these brands can open franchise businesses in Luxembourg.

Our lawyers in Luxembourg can provide information on the steps to create a franchise business.

Elements of the franchise business in Luxembourg

Considering there is no specific law to provide for the establishment of franchise businesses in Luxembourg, there a few elements which can distinguish it from other types of companies, such as the joint venture.

In order to be recognized as franchise, a venture must contain the following elements:

  • –          the franchisor and the franchisee;
  • –          the franchise agreement;
  • –          the right of use over the name of the franchisor;
  • –          the assistance of the franchisor to the franchisee.

Also, the franchisee must be subject to a fee or to pay royalties to the franchisor for the duration of the use of the brand’s name.

Our law firm in Luxembourg can assist with the registration of a franchise business.

Steps to set up a franchise business in Luxembourg

In order to create a franchise business in Luxembourg, the franchisee must first register an entity with the Trade Registrar. This entity can be a sole proprietorship or a limited liability company. After that, the franchisee and franchisor must agree on the type of franchise agreement they will sing. This can be:

  • –          a production contract;
  • –          a distribution contract;
  • –          a service contract.

The franchise agreement will be governed by the Luxembourg Civil Law and must contain information on both parties, as well as their rights and obligations.

For assistance in registering a franchise business or drafting a franchise agreement, do not hesitate to contact our Luxembourg lawyers.