Franchise Agreements in Luxembourg

Franchise Agreements in Luxembourg

Updated on Friday 14th December 2018

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Franchise-agreements-in-LuxembourgLuxembourg has no particular legislation to govern franchise agreements, however, as an European Union founding member, the Grand Duchy has adopted the rules imposed by the European Franchise Federation. These types of agreements are considered “vertical” contracts which are based on the employment of intellectual property, business model or a company’s name. During the last few years, the franchise segment has started to compete with the opening of new companies in Luxembourg due to the fact that international brands are interested in accessing stable markets.

Our Luxembourg lawyers can offer more information on the legislation on franchise agreements available in the Grand Duchy.

Types of franchises in Luxembourg

A franchise can imply the use of the know-how of another company, as long as this is original, a business model used by the franchisor or even the brand of the franchisor in exchange for a fee and part of the returns of the franchisee.

There are three types of franchise agreements one can sign in Luxembourg:

  • -          distribution or supplier franchise agreement which allows the franchisee to supply the goods produced by the franchiser;
  • -          production agreement which enables the franchisee to produce the goods of the franchisor;
  • -          the service franchise contract under which the franchisee can use the business model employed by the franchisor.

No matter the type of franchise agreement, the franchisor is required to support the franchisee during the entire period of the contract. The support can take the form of technical assistance, training or even advisory services.

Drafting franchise agreements in Luxembourg

Considering several laws apply, among which the distribution and the intellectual property laws, one must pay attention to the content of the franchise agreement. A Luxembourg franchise contract must contain the following information:

  • -          the rights and obligations of both franchisor and franchisee;
  • -          the amount of money paid in exchange for using the brand;
  • -          the brand’s name;
  • -          the product or service associated to the agreement;
  • -          the period of the contract;
  • -          the region or area the franchise will be operated;
  • -          renewal and annulment clauses.

You can also watch in the video below the main steps to draft franchise agreements in Luxembourg:

For assistance in drafting franchise agreements in the Grand Duchy, please contact our attorneys in Luxembourg.