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Start a Franchise Business in Cyprus

Start a Franchise Business in Cyprus

When starting a franchise business in Cyprus, companies intend to improve and extend their distribution of a product or service. The franchisor is the owner of the product or the service provider, while the franchisee sells this product or service to the designated market. In this article, our lawyers in Cyprus explain different aspects related to opening a franchise in Cyprus

Cyprus franchising types

Cyprus, as a member of the E.U., has to comply with the common law practices and directives of the E.U. The legal system on the island constitutes an advantageous climate for a solid economy. There is, though, one sector in Cyprus that has not yet adopted the E.U. franchising legislation: the property industry.

All franchising types can be set up in Cyprus, no matter if they are direct or master franchising, area development, joint venture, or affiliates. Registering a legal entity here and concluding bank relationships is a rapid and efficiently effectuated, procedure that generally takes only about one week. Our Cypriot lawyers can offer help to open a franchise company in Cyprus, no matter which kind of legal entity you choose to register. They can also help you comply with the Cypriot taxation system.

Our law firm in Cyprus is at the disposal of both corporate and non-corporate clients with a wide range of services. Among these are the Commercial and Corporate Laws for companies, and the Civil Code for natural persons. We can also offer assistance in Family Law matters. We can provide family law advice to both Cypriot and foreign clients.

How to set up a franchise in Cyprus?

Setting up a franchise in Cyprus involves several steps, and while Cyprus does not have specific franchise regulations like some other countries, you will need to follow general business setup procedures as given below:

Develop your franchise system:

  • Create a successful and replicable business model that you intend to franchise;
    • Document all your processes, operations, training materials, and other crucial aspects of your business. If you need any help with the documentation, please consult with our Cypriot lawyers.

Market research:

  • Analyze the market in Cyprus to ensure that your franchise concept is suitable and has potential demand;
    • Or the lawyers at our law firm in Cyprus can also analyze it for you.

Legal and financial consultation:

  • Consult our legal and financial professionals who are experienced in Cypriot business regulations to help you navigate the process.

Incorporate your business:

  • Register your business as a legal entity in Cyprus. Common options include forming a private limited company (Ltd) or a public limited company (Plc);
    • Obtain any required business licenses or permits. Our lawyers in Cyprus can guide you if your business requires a license or not.

Trademark protection:

  • If your franchise uses specific trademarks, logos, or intellectual property, consider registering them with the help of our lawyers to protect your brand.

Franchise agreement:

  • Draft a comprehensive franchise agreement that outlines the terms and conditions of the franchise relationship. This document should cover obligations, fees, territory, intellectual property, support, and more.

Franchise disclosure document (FDD):

  • Even though Cyprus does not mandate an FDD, you should still provide potential franchisees with detailed information about your franchise opportunity. This could include financial projections, operating costs, support, training, and obligations.

Franchise marketing:

  • Promote your franchise opportunity through various channels to attract potential franchisees.

Selecting franchisees:

  • Screen and select suitable franchisees who align with your business values and can effectively operate your franchise.

Training and support:

  • Develop training programs to ensure that franchisees understand your business model, operations, and customer service standards.

Launch and ongoing support:

  • Assist franchisees in setting up their locations and provide ongoing support for marketing, operations, and any challenges they may face.

Compliance with laws:

  • Ensure that your franchise operations adhere to all relevant laws and regulations in Cyprus, including labor laws and consumer protection laws.

Remember that while Cyprus does not have specific franchise regulations, general business laws, contracts, and commercial practices will apply. Working closely with our legal and financial advisors who understand Cyprus’ business landscape is crucial to ensuring a smooth setup and operation of your franchise in the country.

Franchise disclosure document (FDD)

In Cyprus, like in many other countries, the franchisor-franchisee relationship is governed by general contract and commercial laws. This means that while there might not be a standardized FDD requirement, it is still important for franchisors to provide comprehensive information to potential franchisees before entering into a franchise agreement. This information should cover key aspects of the franchise opportunity, including costs, terms, support, training, obligations, and any other relevant details.

If you are considering entering into a franchise agreement in Cyprus, it is advisable to consult with our legal professionals who are familiar with Cyprus’ commercial laws and can guide you through the process. They can help ensure that you receive the necessary information to make an informed decision and negotiate terms that are favorable to your interests.

Real estate in connection with the franchise in Cyprus

The relevant aspects of the real estate legislation and the real estate market which are applied to franchisors are relevant for both local and foreign franchisors. The general law of the country which covers most of the aspects of real estate or land law is the Immovable Property (Tenure, Registration, and Valuation) Law.

Our Cypriot lawyers can provide more details related to this law. Our law firm in Cyprus also offers assistance in setting up a business in this country. 

The franchise agreement can make provisions for the use of the franchisor’s property or provisions which offer the franchisor the right to choose a real estate where the franchisee can do business from.

If that is the case, the contractual law governs the interpretation of such an agreement. The agreement, though, has to comply with the relevant provisions of the Immovable Property Law, and also it must not contradict the E.U. legislation.

Cyprus is a great country to live in, as more foreigners are deciding to settle there. Its pleasant weather, rich culture and history, and blue-flag beaches make it the perfect setting for a fulfilling life. In addition, its expanding economy and secure surroundings make it the ideal hub for family and business relocation. This is why, if you decide to buy a property in Cyprus, you can rely on our lawyers.

If you have more questions about buying a franchise in Cyprus, or for help related to starting a business here, please get in touch with our attorneys in Cyprus.

Worldwide franchise statistics

Franchises provide aspiring entrepreneurs with a host of advantages, granting them access to marketing strategies, and the credibility of an already established brand. For example:

  • Subway, boasting approximately 43,000 individual restaurants, holds the distinction of having the highest number of global franchise locations;
  • On the global scale, McDonald’s takes the lead as the largest franchise, achieving a staggering annual revenue of over $23 billion in 2021;
  • Establishing a McDonald’s franchise demands a significant initial investment ranging from $1 million to $2.2 million.

If you are planning to start a franchise business in Cyprus, please contact us. Our lawyers in Cyprus can offer you comprehensive practical assistance in this regard.