Sweden

• Author: Anders Fernlund - Anders Thylin
• Pages: 460-474

460 International Franchise Sales Laws

Sweden

I. What Is a Franchise?

A. Scope of Law

Sweden’s franchise legislation is freely translated into English, “The Act on Franchisor’s

Obligations to Provide Information” (lagen 2006:484 om franchisegivares informa-

tions-skyldighet) (the Act). It came into force on October 1, 2006, and is applicable to

franchise agreements that have been entered into after that date.

The Act is mandatory national law, so it is not possible to contract out of its provi-

sions. The intentions of the law are found in the papers prepared for Parliament in

connection with the new law (the Preparatory Works). The Preparatory Works play an

important part in interpreting Swedish law. The Preparatory Works to the Act consist

mainly of a report, “Enlightened Franchising” (Upplyst Franchising, Ds 2004:55),

published in 2004 by a Justice Ministry–appointed one-man committee. The govern-

mental bill “Enhanced Protection of Franchisees” (Förstärkt skydd för franchisetagare,

prop 2005/06:98) followed the report, proposing that an act on franchising be en-

acted in Sweden.

Under the Act, a Franchisor is obligated to provide written information on the

contents of the franchise agreement and other conditions that are necessary for a

prospective Franchisee to understand the franchise, taking all circumstances into con-

sideration. The information must be provided in due time prior to the Franchisee’s

entering into the franchise agreement. The information must be clear and understand-

able.

The Act does not define a “franchise,” but does define a “franchise agreement.”

The legal definition of a “franchise agreement” is an agreement whereby one busi-

ness entity or businessperson (the Franchisor), against remuneration, allows “some-

one” (the Franchisee) to use the Franchisor’s unique business concept regarding

marketing and sales of products or services. Such an agreement will be regarded as a

franchise agreement under the Act only if the Franchisee is obligated to use the

Franchisor’s marks or other intellectual property rights, and the Franchisor is obli-

gated to make sure that the Franchisee complies with the agreement. The purpose of

using the word “someone” in the Act when referring to the Franchisee is to include a

natural person who will become a businessperson or form a business entity when

entering the franchise agreement.

The Act has a general clause stating that the Disclosure Document should contain

information that is needed in consideration of the circumstances with respect to the

implications of the agreement and other conditions. Franchisors looking for specifica-

tions on what kind of information is needed will be disappointed. The Act specifies

only a minimum number of details concerning what should be included in the Disclo-