Although more than 300 U.S. companies have an active presence or subsidiaries in Norway, the most common way of doing business is through agents and distributors. Around 3/4 of Norway’s 5.5 million people reside in the southern half of Norway. Most major importers and distributors are headquartered in the Oslo region; some have sub-agents or sales offices in other major Norwegian cities.
The rest of the country is made up of widely dispersed, small population centers that are expensive to serve due to long distances and high freight expenses. There are relatively few countrywide, multi-store chains outside the apparel, sporting goods, grocery sectors, and DIY sectors, and most retailers and distributors are small by U.S. standards. As a result, sub-agents and secondary distribution are the standard, workable method of handling Norway’s scattered northern markets. With proper market promotion and support, a good local business partner and/or an astute local office, U.S. companies have found good prospects in this small, but affluent market. Moreover, U.S. companies may find some licensing and joint venture agreements and full Norwegian subsidiaries to be excellent vehicles for tapping upscale markets beyond Norway (e.g., the Nordic region and the Baltic states).
Using an Agent to Sell U.S. Products and Services
As mentioned above, although more than 300 U.S. companies have an active presence or subsidiaries in Norway, most U.S. firms rely on agents or distributors to represent their business in Norway.
Given the small size of the market, many agents and distributors will prefer exclusivity as they invest It is worth noting that many agents and distributors in Norway will prefer exclusivity given the small size of the market. Since they will typically invest effort and financial resources into building brand awareness and developing a market position for the U.S. product or service. It is advisable to carefully think through the issue of exclusivity versus non-exclusivity before entering negotiations with potential partners. Clearly stated terms, including performance measures and termination clauses, should be built into any agreement granting exclusivity (see further information below).
Most agents, major importers and distributors are headquartered in the Oslo region; some have sub-agents or sales offices in other major Norwegian cities, such as Bergen, Stavanger, Trondheim, Kristiansand, and Tromsø.
Establishing an Office
The process of establishing a Norwegian company is relatively simple and generally free of restrictions. The Norwegian Ministry of Trade and Industry has established the Altinn Business Information Service web portal to simplify the process of establishing and running business enterprises in Norway. The information is aimed to be relevant, reliable, and non-biased. Altinn Business Information Service addresses two target groups; 1) Entrepreneurs looking for information needed to start his/her own business, including forms and brochures, all free of charge; and 2) Enterprises that need answers to most of the questions arising during regular business activities: taxes, value-added tax (VAT), bookkeeping, employer-employee relations, legislation, etc. Altinn Business Information Service provides useful information in an abbreviated format, together with links to sources and sites.
All companies establishing a presence in Norway are subject to mandatory registration through a central government agency, the Bronnoysund Register Center, which also maintains open annual accounts on all Norwegian companies.
The Bronnoysund Register Center is a government body under the Norwegian Ministry of Trade and Industry and consists of several different national computerized registers. These registers contain information and key data on liabilities and titles in mortgaged movable property; business enterprises; annual accounts and auditor’s reports of limited companies; bankruptcies and compulsory liquidations.
The Norwegian Competition Act requires that concentrations (mergers, acquisitions, etc.) be notified to the Norwegian Competition Authority by way of a standardized notification.
For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of Department of State’s Investment Climate Statements website.
Franchising
U.S. businesses looking to franchise within Norway, or the European Economic Area (EEA) will likely find that the market is quite robust and friendly to franchise systems in general. There are many U.S. franchise chains active in Norway, including McDonalds, Burger King, TGI Friday’s, Starbucks, Avis, Johnny Rockets, and several others. However, most franchising systems operating in Norway are based on concepts developed in Norway. All franchise systems in Norway are required to act in accordance with the Norwegian legal framework for business enterprises. They also must operate in line with the framework of the EEA, which is harmonized with EU legislation. Franchising is exempt from the Competition Act through EU directive 4087/88. In Norway, franchising is regulated by the Ministry of Trade and Industry. There are no major obstacles to starting a franchise chain in the country.
There are some challenges in establishing a franchise concept in Norway. Public knowledge about franchising is relatively limited, though there have been attempts to establish franchise conferences in Norway to better educate the public and potential franchisees. There are very few central marketplaces for potential franchisees to meet, so most of the business opportunities are presented through newspaper and magazine advertisements, the Internet, or facilitated meetings. Norway has a limited market size with 5.4 million people distributed over a large geographical area, often forcing franchise concepts to be broader than what is typically the case in the United States. Franchise systems in Norway also face high costs, for example for labor and property rental, and a tight labor market. It has been relatively difficult for potential franchisers to find financing in Norway.
There are several laws that govern the operation of franchises within the EU, but these laws are fairly broad and generally do not constrain the competitive position of U.S. businesses. The potential franchiser should take care to look not only at the EU regulations, but also at the local laws concerning franchising. More information on specific legislation can be found on the website of the European Franchise Federation.
Direct Marketing
There are plenty of options for companies wishing to use direct marketing in Norway, even though privacy issues and protection of personal data have been moved higher on the agenda by Norwegian consumers and authorities, particularly the Norwegian Data Protection Authority. Norwegian consumers now have an option to reserve the right to refuse receiving direct marketing. A national register for this purpose has recently been established by the Bronnoysund Register Center, the administrative agency responsible for several national control and registration schemes for business and industry.
For information on Norwegian direct marketing service providers, contact:
Tel: 011 (47) 99 33 20 00
Tel: 011 (47) 22 39 69 00
There is a wide range of EU legislation that impacts the direct marketing sector. Compliance requirements are stricter for marketing and sales to private consumers. Companies need to focus on the clarity and completeness of the information they provide to consumers prior to purchase and on their approaches to collecting and using customer data. The following gives a brief overview of the most important provisions flowing from EU-wide rules on distance-selling and on-line commerce.
Processing Customer Data
The EU has strict laws governing the protection of personal data, including the use of such data in the context of direct marketing activities. For more information on these rules, please see the privacy section below.
Distance Selling Rules
In 2011, the EU overhauled its consumer protection legislation and merged several existing rules into a single rulebook, the Consumer Rights Directive, the provisions of which have been in force since 2014. The Directive contains provisions on core information to be provided by traders prior to the conclusion of consumer contracts. It also regulates the right of withdrawal, includes rules on the costs for the use of means of payment and bans pre-ticked boxes. There are updates to these rules that apply from May 2022. For more information, consult the EU Commission’s useful tool to learn about consumer rules.
The European Union adopted in March 2019 a set of two directives which govern EU-wide contract rules for the online sales of goods and the supply of digital content and services. These rules apply from January 2022.
Distance Selling of Financial Services
Financial services are regulated by a 2002 Directive (2002/65/EC), which was designed to ensure that consumers are appropriately protected with respect to financial transactions taking place where the consumer and the provider are not face-to-face. In addition to prohibiting certain abusive marketing practices, the Directive establishes criteria for the presentation of contract information. Given the special nature of financial markets, specifics are also laid out for contractual withdrawal.
Direct Marketing over the Internet
The e-commerce Directive (2000/31/EC) imposes certain specific requirements connected to the direct marketing business. Promotional offers must not mislead customers and the terms that must be met to qualify for them have to be easily accessible and clear. The Directive stipulates that marketing e-mails must be identified as such to the recipient and requires that companies targeting customers on-line must regularly consult national opt-out registers where they exist. When an order is placed, the service provider must acknowledge receipt quickly and by electronic means, although the Directive does not attribute any legal effect to the placing of an order or its acknowledgment. This is a matter of national law. Vendors of electronically supplied services (such as software, which the EU considers a service and not a good) must also collect value-added tax (see Electronic Commerce section below).
Joint Ventures & Licensing
Joint ventures and licensing agreements are common in Norway. Joint ventures may not have a name of their own, and its existence cannot be raised as a defense against claims made by third parties. Joint ventures may not be registered and have no independent legal identity. Bookkeeping and audit requirements do not exist for joint ventures, except when specified in the joint venture agreement.
Regarding licensing agreements, it is not mandatory to record these in the official patent office (Styret for det Industrielle Rettsvern) in Norway. However, submitting a record may be recommended. A recorded licensee has the statutory right to be notified of any third parties filing cancellation actions, etc., and can thereby be more prepared to enforce his/her rights under the license agreement.
There are several local consulting firms that provide assistance in connection with license agreements adapted to the Norwegian market and in accordance with Norwegian intellectual property law. For a list of consulting firms, see the section below on Protecting Your Intellectual Property.
Express Delivery
Several large logistics companies offer services in Norway, including:
Due Diligence
Product safety testing and certification is mandatory for the EU market. U.S. manufacturers and sellers of goods must perform due diligence in accordance with mandatory EU legislation prior to exporting.
For more general due diligence services, the U.S. Embassy in Oslo is well equipped to assist U.S. businesses. Comprised of offices of the U.S. Department of Commerce, Department of State, Department of Defense, and the Social Security Administration, the Embassy provides services and information for U.S. exporters, investors, and their Norwegian partners. Our trade specialists are available to counsel American companies, as well as Norwegian agents, importers, and end-users.