Doing business in Spain: Section V- Franchise
Franchises have increased in Spain and grown rapidly. This method for doing business in Spain without investing has become very popular, it has effectively been used for small retailers to compete with larger retail stores.
Through a franchising contract, franchisee is given the right to use goods, services, trademark and advertising of the franchisor for a specific period of time. The franchisee must pay the franchisor as a condition of obtaining or commencing the franchise operation.
Franchising companies must be entered in a special Administrative Franchise Registry within a minimum of 20 days prior the signature of a franchising contract or making any payment to franchiser.
The franchiser may be seriously fined for non-registration.
The franchisee is the franchise business owner, though this takes part of a commercial network. He must submit to the network business organization.
Franchisor must deliver written information to the franchisee before the signature of the franchising contract, in order that the franchisee may decide on whether to join the franchise team or not.
The franchising contract must state those terms that the parties consider appropriate, as long as those are not contrary to law or public policy.
The following provisions are commonly stated:
- Initial franchise fee: This is what it costs to join the franchise network
- Royalty fees: These payments will continue as long as the franchise lasts. Normally these fees range from 4 percent to 20 percent, depending on the revenues.
- Advertising fees: Once you join the team you will be expected to pay annual fees for the franchise advertising, this charge will not exceed 3 percent of gross sales.
We provide advice on for corporate and individual customers who are intending to invest in Spain.