Company incorporation in Switzerland is a prevalent business phenomenon, thanks to the country’s stable economy, a liberal labour market, tax incentives, and skilled workforce. In addition, the Swiss government has paved the way for a wide range of measures that allow foreigners to run a small business of their choice, form a company, or invest in one. Consequently, Switzerland has witnessed a massive influx of investments from ex-pats over the past years.
Franchising is one of the most lucrative business opportunities in Switzerland. In this type of business model, a franchisor is a parent business that allows a franchisee to conduct business using the same products or services, trademarks, techniques, etc., based on an agreed-upon fee. An agreement governs the relationship between a franchisor and a franchisee. If you wish to open a company in Switzerland in the franchising sector, you will be subject to the Code of Conduct provided by the Swiss Franchise Association.
Read on to learn more about starting a franchise business in Switzerland.
What Are the Different Franchising Regulations in Switzerland?
There are no specific laws in Switzerland concerning running a franchising business. However, if you plan on starting a company in Switzerland in the franchising sector, you will be subject to the following set of rules and regulations:
- The Swiss Code of Obligations (CO) and the related Federal Court Decisions (FDC)
- The Swiss Intellectual Property Laws, especially the Trade Mark Act, the Designs Act, and the Copyright Act (CA)
- The Swiss Civil Code (CC)
- The Swiss Unfair Competition Act
- The Swiss Act on Cartels
- The Swiss Data Protection Act
- Other restraints concerning competition
In Switzerland, no legal distinctions exist concerning a franchise business wherein a franchisor appoints a single franchisee, and a franchisor sets multiple franchisees.
What Are the Requirements for Operating a Franchise Business in Switzerland?
Foreigners must keep the following details in mind if they wish to run a franchise business in the country.
- A foreign national can run a franchise without any restrictions (except some rules concerning certain business activities). This is because foreign nationals are subject to the same regulations that exist for Swiss business people.
- There are no statutory authorizations or supervision rules for the administration of franchising businesses in Switzerland, barring a select few. Certain business activities governed by the franchise agreement will have to acquire authorization on the local market before being allowed to carry out their business activities. These include Swiss company registration in franchises concerning banking or insurance, healthcare, gambling, etc.
- In Switzerland, a successful franchising company can be set up via a franchise agreement. It can also be set up through a branch office or a subsidiary.
- The franchise agreement must contain the rights and obligations of the franchisor and the franchisee. The Swiss lawmakers do not impose any rule whatsoever regarding the translation of the document into the local language. However, parties to the agreement can recruit the help of a lawyer if they wish to offer an official translation of the paper in the Swiss language.
What Is the Right Business Entity for Franchisors and Franchisees in Switzerland?
A franchisor doesn’t need to incorporate a subsidiary or set up a branch in Switzerland. However, a franchisor hoping to benefit from the liberal Swiss market can either pick a company limited by shares (AG) or a unit of an eligible foreign franchisor entity as it may warrant tax advantages under foreign taxation regime.
Franchisees can either choose an AG or a limited liability company (GmbH) or enter the Commercial Registry as a sole enterprise.
What Is the Duration of Franchise Business in Switzerland?
While signing the franchise agreement that will contain the rights and obligations of the franchisor and franchisee, both parties can set the duration for the validity of the contract. Generally, a franchise agreement exists for a period of five to ten years. However, the local Swiss legislation does not impose any specific term upon foreign nationals who intend on starting a company in Switzerland in the franchising sector.
Switzerland is one of the most sought-after locations for starting a business in Europe, thanks to the quality of life, an advantageous taxation system, work-life balance, government support, and other business-friendly measures. If you wish to learn more about Swiss company incorporation or the business opportunities in Switzerland, get in touch with us today!