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Sweden Routes to Market

So you've decided to expand your business in Sweden 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?

Here are your typical options when expanding a business into Sweden. If somebody wants to start up a company in Sweden, different rules apply depending on citizenship, form of business chosen and whether the person intends to take up residence in Sweden.

Types of company you can choose when registering a business in Sweden:

Sole Trader (enskild firma)

Sole trader is a type of company in which there is no clear division between you as an owner and the company itself. You are personally responsible for the company's debts. Husband/wife or cohabiting partners with a common child can act jointly as a sole trader.

Partnership and Limited Partnership (handelsbolag / kommanditbolag)

A partnership must have two or more partners. The partners can be private individuals or companies. A partnership is a legal person. The partners decide who will have the right to represent the company and to enter agreements on behalf of the company as an authorised signatory. In a partnership, the partners are always personally, jointly and severally liable to other parties and this can never be contractually relinquished. A limited partnership is a variant of partnership. At least one partner in a limited partnership has unlimited personal liability.

Economic Association (Ekonomisk frening)

An economic association is an alternative if you are at least three people who want to start a company together in Sweden. Both legal and natural persons can be members. At least three members are required. An economic association is a legal person. The members of an economic association are not personally liable for the association's liabilities. The financial risk is in principle limited to the member's financial contributions to the association. The members pay a financial contribution and at the general meeting of association decide on fundamental rules which will apply to the association. At the general meeting the members also appoint the board and auditor.

Limited Company (Aktiebolag)

A limited company is a type of company that is suitable when there are several owners or if the company may be exposed to financial risks. The limited company is a legal person in itself. When you start up a limited company in Sweden you must have at least SEK 100,000 (£8,600) in share capital. The share capital is equivalent to a quantity of shares held by the shareholders as proof of their ownership of the company. The share capital can consist of cash or property which is of use to the business. Such property is called capital contributed in kind and must be valued by an auditor.
Alternatively you may want to concider a:

Branch office

A foreign-based company can set up a business in Sweden without opening a subsidiary by starting a Swedish branch. The branch is not a separate legal entity but part of the foreign-based company. A branch office is registered at Bolagsverket (the Swedish Companies Registration Office). The registration is straightforward.

A Representative Office

A representative office is the most limited presence a foreign-based business can have and is a little-used organizational structure in setting up a business in Sweden. Representative offices lack company status and cannot enter into commercial agreements.

Exporting

[Link to Export page]

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 your Business in Sweden

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 Sweden with a franchising formual 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 Sweden: although few, rely predominantly on your franchisees. They include: poor quality franchisees; franchisees not declaring all income; poor performance.

Franchising is growing up day by day in Sweden, playing a relevant role in the economy of the country and it produces a net turnover of about 100 billions crowns, representing the 5% of GDP (gross domestic product). Nowadays we can count 15.000 companies working in franchising; the most well known brands are Gallerix, Burger King and Hemglass. The most driving sectors are represented by fast-food, retail and services, but if you wish to start up a business in Sweden a franchising formula may be consider in a wide range of sectors.

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