Open a Franchise Business in Montenegro
Open a Franchise Business in MontenegroUpdated on Monday 27th February 2023
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There are various ways in which foreign investors can enter the Montenegrin market. Among these, starting a business from scratch, buying a shelf company and setting up a partnership with a local company are the most common one. There are advantages linked to every choice, however, entrepreneurs have several aspects to consider before opening a company in Montenegro.
While for some businesspersons the registration of a new company seems easier, other choose an option that is starting to become quite popular in Montenegro: the franchise.
Setting up a franchise in Montenegro is quite simple considering the economic development of the country in the last few years. Below, our lawyers in Montenegro explain the requirements related to opening a franchise business here. You can also rely on us for the preparation of all the documents required when creating a franchise business.
Requirements for opening a franchise in Montenegro
The franchise is a worldwide recognized business form which is why it is also often used in Montenegro.
Franchises must respect two of the most important laws in Montenegro: the Company Law and the Civil Law with respect to the provisions of contracts. This is because the franchise agreement stands at the base of this type of business.
In order to set up a franchise business in Montenegro, there has to be two parties entering an agreement: the franchisor which is the party supplying the business model, the materials and the support for developing the company and the franchisee which is the party taking and promoting the business model from the franchisor.
All the terms of the agreement are drafted and signed by the parties entering the franchise contract.
Our Montenegro lawyers can offer more information on the provisions imposed by the Contract Law when it comes to signing franchise agreements.
Registering a company for a franchise business in Montenegro
Considering a franchise business implies running under an approved law of the country it is set up in, the Montenegro Company Law will be respected when starting this type of structure here. In this case, the franchisee has the obligation of registering an approved business form. The most common one is the private limited liability company, which is suitable for activities in any industry, including for franchises.
The regulations for registering an LLC for a franchise business are the same as when running any other commercial activity in Montenegro.
Our law firm in Montenegro can assist foreign entrepreneurs interested in setting up a franchise here by incorporating an LLC with the Trade Register. Besides helping you with the incorporation of a limited liability company, you are also welcome to get in touch with our immigration lawyers for their services. If you intend to stay for more than 90 days, you must obtain a temporary residency permit. They frequently last a year or as long as the underlying condition is treated (e.g., employment or studying.) Permanent residency permits are valid for five years and are renewable. To learn more about residency permits in Montenegro, please consult with our lawyers.
The franchise agreement in Montenegro
As mentioned above, the franchise agreement is the main document standing at the base of a franchise business in Montenegro. As any contract, it must contain various provisions, among which:
- information about the franchisor and the franchisee (their names and addresses);
- the date the agreement was signed and of the commencement of the activities;
- information on the duties of both franchisor and franchisee in relation to the business;
- information about the rights of the franchisor and franchisee with respect to the business;
- information about the intellectual property rights on the franchise (these belong to the franchisor);
- the fees and the royalties payments related to the use of the brand of the franchisor;
- the duration and the territory of the franchise agreement (where such conditions are imposed).
The franchisor and the franchisee can also agree on any confidentiality clauses in their relation.
Our lawyers in Montenegro can offer detailed information on how a franchise agreement must look like. We can also help you draft or verify such an agreement, should you need legal advice.
Duties and rights of the franchisor and franchisee in Montenegro
As mentioned above, one of the most important clauses of the franchise contract is related to the rights and duties of the franchisor and franchisee.
These usually refer to:
- - the right of the franchisee to benefit from full support from the franchisor when setting up the business;
- - the right of the franchisee to benefit from training in relation to the activities to complete under the franchise;
- - the duty of the franchisee is to respect all the conditions imposed by the franchisor in the contract;
- - the right of the franchisor to benefit from the income from the business completed by the franchisee under the form of a fixed fee or royalties;
- - the obligation of the franchisor to support the franchisee with training and materials related to the business.
If you are interested in setting up a franchise business and need assistance, please contact our Montenegro law firm.