When opening a company in Norway through a franchise the investors will have to choose a legal entity under which their business will operate. In this particular case, the most suitable business forms are represented by partnerships and private or public limited liability companies. However, in practice, most of the Norwegian franchises are registered as public or limited liability companies and our team of consultants in company registration in Norway can assist with advice on the registration of one of these business forms.
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The Franchising Industry in Norway
Franchising in Norway has become an increasingly attractive model for both local and foreign investors in this country. The most common sectors for franchising include:
- real estate and property;
- travel and leisure;
- retail;
- food and beverage (restaurants and cafes);
- healthcare and home services.
Emerging sectors where franchising is growing in Norway include personal services, business-to-business services, hotels, and the automotive industry. Franchising contributes approximately 21 billion dollars to the Norwegian economy annually.
If you are considering entering into a franchise agreement, our team of experienced agents in Norway can assist you in drafting and finalizing the contract. We can guide you through the entire process, ensuring that you fully understand the terms and responsibilities of becoming a franchisee in Norway. Find relevant support from our experts in Norway in this matter.
Key requirements for opening a Franchise in Norway
Establishing a franchise in Norway is a relatively straightforward process that can be completed quickly. The first step in forming a new company (NewCo) is to sign a memorandum of incorporation, which includes key documents such as the company’s articles of association and an opening balance sheet. The opening balance must meet the minimum share capital requirement, which varies depending on the type of company being formed.
For a private limited company (AS), the minimum share capital requirement is currently 30,000 Norwegian kroner. For a public limited company (ASA), the required minimum share capital is 1 million kroner. Once the share capital is paid, it can be used freely by the company, including for covering the costs associated with setting up the business.
Overall, the process of incorporating a franchise company in Norway is designed to be efficient, with a clear legal framework in place to ensure the proper formation and capitalization of the entity.
What is the tax system applicable to Norwegian franchises?
In terms of taxation, a Norwegian franchise will be taxed depending on the legal entity that was chosen for company formation in Norway. In the case of franchises operating here that are not tax residents of Norway, the taxation system will be applicable only for the income obtained from commercial activities developed on the local market. As a general rule, the following will apply:
- taxation of profits obtained from business activities – as a foreign entity, the franchise will be entitled to benefit from the provisions of the double tax treaties signed here;
- taxation of income deriving from immovable or movable property – the tax rate applicable in this case is of 24%;
- taxation of employment – the taxation of the company’s employees is applied on a progressive base and it can increase up to a tax rate of 46,7%;
- value added tax (VAT) – the VAT in Norway stands at a standard rate of 25%.
If you need assistance regarding the taxation regulations in this country, our team of company formation experts in Norway can provide specialized support in this matter, including services like VAT registration in Norway.
Types of franchise agreements in Norway
In order to start a Norwegian franchising business, it is necessary to sign a franchise agreement and in this country, there are several types of contracts, which can be detailed by our team of specialists in company formation in Norway. Investors can choose between distribution agreements and service agreements.
As their name suggest, the service agreement is enforced when the franchisor provides services, while the distribution agreement is used for selling, through a franchisee, various products on a given market.
Franchisors and franchisees in Norway, in line with Norway’s national legislation and the principle of contractual freedom, have the flexibility to negotiate and include specific terms in their agreements, as long as they respect the autonomy of both parties. For example, a franchise agreement could include a termination clause, outlining the conditions under which either party may exit the relationship, whether with or without cause. This may also specify whether the termination is immediate or subject to a notice period (typically ranging from 6 to 12 months).
In terms of dispute resolution, Norwegian courts strongly encourage mediation, although it is not a mandatory step in franchise-related cases. The parties involved can also choose arbitration, which offers several advantages, including privacy, flexibility in selecting arbitrators, and efficiency. Arbitration is a viable option for both domestic and international franchisors and franchisees.
Investors may also sign a production franchise agreement and they can benefit from the assistance of our team of representatives in company registration in Norway for more details concerning these types of agreements.
Franchise data in Norway
Known for the highest living standards in Europe that Norway offers, it has become a more and more demanded country for franchise business entities around the world, such as official data presents:
- There are around 250 franchises in Norway from different business fields, including business to business, hotels, retail, personal services or real estate;
- The franchising industry in Norway earns around 21 billion USD each year;
- The Norwegian city with most international brands is Oslo with over 634,000 branches opened.
Do not hesitate to contact our professional company formation agents for more information about opening a franchise in Norway.