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Portugal Routes to Market

So you've decided to expand your business in Portugal and researched your market. Now it's time to decide how you will register and set up the business. What is the best, most viable option for your company, your products, and yourself? Which is the path of least resistance?

This section is dedicated to the typical options when expanding a business into Portugal:

Foreign investment has been always highly regarded in Portugal. There are no obstacles to capital coming into the country nor are there any restraints on the repatriation of profits, dividends or capital by non-residents.

Foreign investors need to register their transactions with the relevant Portuguese authorities: AICEP - Agencia para o Investimento e Comércio Externo de Portugal.

Registering a Business in Portugal

There are four types of company that may be set up in Portugal. The first two of these are the most common:

• Private limited liability companies (Sociedade por Quotas, LDA): require at least two partners, although there are Sociedade Unipessoal por Quotas, which have a single partner (either an individual or a collective entity). The corporate entity (and not the individual) is responsible for any company liabilities. There is a minimum capital investment of €5,000.

• Public limited companies (Sociedade Annima SA Corporation): requires at least five shareholders, unless one of the shareholders is the State, in which case only two shareholders are needed. The corporate entity (and not the individual) is responsible for any company liabilities.

• Limited co-partnership companies (Sociedade em Comandita, SC): these businesses have two categories of partners: Dormant partners (Scios Comanditrias) whose liability is limited to the amount of their shares and Full partners (Scios Comanditados) who are liable for any company debts.

• General partnership companies (Sociedade em Nome Collectivo, SNC): partners will bear unlimited liability for any company debts.

There are many organisations that can offer advice or help with starting a business in Portugal. These include local Municipal Councils, local Citizen's Shops (Loja do Cidado) and local employment services. Some towns and cities have what are known as Business Formality Centres (Centros de Formalidades das Empresas, CFE), designed to facilitate the setting up of a business in Portugal. CFEs can inform entrepreneurs about exactly what documents are necessary, can advise on the best company structure, explain the complete incorporation procedure and provide contacts with appropriate government bodies.

Licensing

Licensing is the permission for someone else to use your intellectual property rights: either a patent, trademark, trade secret, or copyright. Different types of license include:

• Non-Exclusive License - A non-exclusive license implies that your intellectual property rights can be awarded to more than one licensee.

• Exclusive License - A little more complex because, although the license may not be exclusive to one licensee, it may be exclusive to a geographic location, a certain product, or limited area of use. For instance, you may grant a licensee exclusive use of the rights in France, yet grant another licensee its use in Germany.

• Patent License - The allowance of another party to use your patented product, design or process.

• Trademark License - Trademark licensing means permission is awarded to a licensee to sell a product or service. However, the licensor retains more control in order to ensure that quality is maintained. Quality control is in place to uphold the image of the brand / product / service / licensor, and therefore sustain customer confidence and satisfaction.

Franchising In Portugal

Franchising is the licensing out of a business name, product, technique, philosophy, trademark, etc, for a percentage of the income. Instead of setting up new outlets as part of your expansion, you license your existing business blueprint out to franchisees who then set up and manage it for you.

The benefits of starting up a business in Portugal with the franchising formula include: more freedom, as the franchisee takes on major responsibilities; minimal expense; lower cost and higher profits; potential for fast growth; brand building.

Disadvantages of franchising a business in Portugal: although few, rely predominantly on your franchisees. They include: poor quality franchisees; franchisees not declaring all income; poor performance.

Portugal is an expanding market for franchisors and very often companies starting up a business in Portugal realise the country is s a stepping stone for entering the Brazilian market. Although the number of international franchise brands is still relatively small more foreign franchisors expanding a business in Portugal are entering the market in franchising. The majority of franchise businesses operate in the service sectors and provide services in the areas of wellness, health care and real estate, but also retail franchises prove popular, in particular for childrens clothing, books, and natural products. The food sector may offer good opportunities. Consider it if you wish to start up a business in Portugal.

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