Open a Franchise Business in Slovakia
Open a Franchise Business in SlovakiaUpdated on Tuesday 12th November 2019
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There are several ways in which a foreign entrepreneur can set up a business in Slovakia. Apart from starting a new business, one can also buy shares in a company and thus become a shareholder or can enter a franchise agreement with a Slovak company and thus ensure the success of their own business.
Those who want to set up franchise businesses in Slovakia need to respect a few laws, among which the Civil and the Commercial Codes. Also, entering a franchise agreement implies respecting several specific requirements.
Below, our lawyers in Slovakia explain the steps for setting up a franchise in this country. We can also assist those who want to open such venture in Slovakia.
The Slovak franchise – definition and features
The franchise is a business format in which a company takes on the model of another company under strict terms. The two parties in a franchise in Slovakia will be the franchisor (the company providing the business model) and the franchisee (the company taking on the business model). The franchise created based on an agreement or contract in which the rights and obligations of both parties are clearly stated.
Here are a few features of franchises in Slovakia:
- the franchisor will put at the disposal of the franchisee the business and the name of the business;
- the franchisor will also provide the franchisee with all the support related to the creation of the franchise (including training and materials);
- the franchisor will ensure the franchisee uses only the products or know-how of the brand;
- the Slovak franchisee will be required to use the name of the franchisor’s business;
- the franchisee will also be required to follow the exact business model as imposed by the franchisor;
- the franchisee will respect all the requirements, including those related to the materials, products or services sold or provided by the franchisor.
There are several types of franchises which can be created. Our law firm in Slovakia can offer more information about the franchise business model in case you are interested in pursuing this format and start your own company.
Registering a company in order to set up a Slovak franchise
Even if a franchise implies taking on an existing business model, the franchisee must also have the legal entity which enables them to complete the activities. For this purpose, it is advisable to register one of the types of structures available under the Slovak Company Law. Among these, the private limited liability company is preferred by most foreign investors coming to Slovakia. Also, just like any other business, the company operating the franchise must register for taxation with the tax authority in Slovakia.
The steps for setting up a company in order to open a franchise in Slovakia are the same and the procedure can be completed by our lawyers.
The franchise can also register with the Slovak Franchise Association.
Types of franchises in Slovakia
As mentioned above, one can choose between several types of franchise businesses when deciding to start such a company in Slovakia. Among these we mention the following types:
- manufacturing franchises under which the franchisee is granted the right to distribute the products of the franchisor;
- the product franchise under which the franchisee can sell the products or services provided by the franchisor;
- the management franchise under which the franchisee to manage a business in the name of the franchisor;
- the business-format franchise under which the franchisee uses the trademark of the franchisor;
- the investment franchise which is suitable for large projects developed across the entire territory of the country.
One of the most important aspects which need to be respected by the franchisee when setting up a franchise business in Slovakia is confidentiality related to the know-how of the business model. Also, the franchisee is required to pay the copyrights or other intellectual property rights for using the name of the franchisor.
Our Slovak lawyers can explain all the contractual requirements arising from a franchise business.
Foreign investments in Slovakia
The last few years were very prolific for Slovakia, considering Foreign Direct Investments (FDIs) registered a significant growth. Here is some information about Slovakia’s economic results in the past years:
- in 2017, Slovakia had a real Gross Domestic Product (GDP) growth of 3.4%;
- in 2018, the GDP increased even further, reaching an overall growth of 4.1%;
- the unemployment rate dropped significantly from 9.7% in 2016 to 5.4% in April 2018;
- the US is one of the most important trading partners of Slovakia, with imports of 2,33 million USD in 2017.
If you want to open a franchise business and need guidance, please contact our Slovak law firm.