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Starting a new business

M

miek_neary

New Member
Hi,
I am looking to start a new business and at times I feel like I might be biting off more than I can chew. But before I go and try to get some help from legal advisers or other professionals who I’ll have to pay, I thought I’d give the forum a go and see if any kind people on here can help me out with a few things. Some things might be very basic, but bear with me.
First of all, a quick background story: I’ve designed a travel app with excursions, tours etc. I am looking to distribute it primarily via rental companies (the app works really well if you have a car). The car rental company will sell it as an add-on to the car and they will retain a percentage of what they charged the customer, and the rest will be paid to me. All this will take place in Spain. I live in the UK and have no connections with Spain. I am currently self-employed (nothing to with this business; I’ve been self-employed for 5 years now). I have never ran a company before.

  • Trademark: I am looking to register the trade mark in the EU and the US as my first step. I think I know how to do it on the WIPO’s website (World Intellectual Property Organisation),so don’t really have any questions, but perhaps any advice or anything I should watch out for? The cost is roughly 2200 CHF (Swiss Francs),which is around £1700, so very pricey, but seems inevitable if I’m to treat this business seriously and if I am to be treated seriously by other companies that I want to work with, am I right?

  • Registering as an LTD here in the UK: Once the trademark has been approved, I can settle for the company name. I will not have an office (this business doesn’t require it),so any ideas on those virtual offices that you can get? Any recommendations? I know Companies House requires a physical address and I don’t mind giving my personal address for correspondence, but not for the public record as it’s not safe and also not professional. Any other ways around it, other than a virtual office?

  • Contract: once it’s all up and running, I will have to fly out to Spain and pitch the product to the car rental companies. Once they decide that they want the product, both parties (my company and their company) will have to sign a contract. Now, I have no idea what this contract should look like etc. So my question is, who would I get to draft such a contract, as I don’t even know where to start? Bear in mind that this could either be a local Spanish car rental company or a large well-known international car rental company (perhaps the latter wouldn’t even be registered in Spain, but Ireland or wherever those huge companies tend to be registered). So will this contract be bound by Spanish law, even though it will be between a UK company (mine) and a Spanish company (smaller car rental company) or between a UK company and an Irish (for example) company? Will the contract have to be in Spanish? The actual sale of the product will take place in Spain (either upon arrival at the rental desk or already purchased when booking the car online; all paid in Euros).
Any advice would be greatly appreciated. I’d like to believe I’m a fairly organised person and I have already come very far in understanding how to make this work, but the above issues just seem too much for me to figure out on my own and also quite specific, so not easy to find answers to online, especially number 3. The actually product itself is all set up and I know exactly what I am doing – it’s the bureaucracy and paperwork like this that I struggle with.
Thanks in advance!
Michael
 
selfemployed

selfemployed

Active Member
Verified Member
Looking through your comments I would make the following observations:-
  • Why are you only targetting Spain?
  • If Spain is your main market you will need a presence out there - a partner maybe?
  • Use your accountants address for the business - they will charge a small fee each year but nothing to worry about
  • If operating in Spain then you will need to operate under Spanish laws - get a UK lawyer and a Spanish one
  • Are you fully funded to start this venture - once you start to look at legal representation the fees can start to rise
If I was in your shoes I would look at the following options:-
  • Why not look to tie-up with the largest car rental company in Spain? They will take a share of income but they have the contacts and infrastructure to make this work - if they like it.
  • Have you thought of licensing the App to other car companies via a white label service. This means they can rebrand the service (or add their name as a partner) and will pay you a license fee/slice of income.
  • Which other markets could you target? Portugal? Italy? US? Maybe look at appointing hire car partners in each country.
While you havent really shared the App idea yet, I think you will get swamped with legal fees if you go it alone and one of the major car rental companies might copy your idea. I would consider going down the licensing route or if someone made you a good offer, sell outright?
 
G

Goingitalone

Member
Verified Member
While your plan and ideas read very well, it will cost a fortune to make a dent in the market if you are determined to go it alone. The idea of tying up with a larger company with influence in your target market makes more sense. I would rather have a smaller slice of a huge pie than all of a very small pie :)
 
B

BusinessABC

New Member
  • If operating in Spain then you will need to operate under Spanish laws - get a UK lawyer and a Spanish one
I'm not a lawyer and @miek_neary, you definitely need to get proper legal advice on this. As @selfemployed says though, it is pretty clear that your app will need to comply with Spanish Laws if operating in Spain. However, the contract between you and the car hire companies will be an international contract, so I don't think there is any requirement that this must be handled under Spanish/UK law - I may be wrong though and a lawyer will be better placed to explain this.

Anyway, what I'm trying to get at is that I think you will need to make sure your contract has governing law/jurisdiction clauses. After all, you don't want a contract written for use under UK laws/courts and then the hire company takes you to court in Spain, where the laws may make some, or all, of the terms invalid. Again, a lawyer will be better placed to advise you.

Also, when choosing the jurisdiction of your contract, I guess Spanish laws/courts would be the best choice. First of all, I think this would make a client is more likely to agree to the contract, as they would be signing a contract governed by laws of their country (i.e. laws they have a good understanding of). Also, I assume this would make it easier to get monies owed if they breach the contract - Spanish courts will likely have more power than UK courts to summon a Spanish citizen/business to court. Likewise, Spanish courts likely have greater power to order a Spanish citizen/business to pay you what is owed.

Alternatively, it may be possible to have the contract governed under some form of centralised EU contract law (I'm not sure whether or not this exists). If it does exist, this may make more sense as it shouldn't mean a completely new contract has to be drawn up if you expand to other countries in the EU. Once again though, my advice is consult with a lawyer, as they'll be able to tell you the best jurisdiction for your contract.

As I say, I'm not legally qualified so please take what I've said with a pinch of salt, but I hope I have been of some help. Good luck!
 
B

BusinessABC

New Member
Sorry for the long post.

Also, you mention that your app relates to tours and excursions. Have you considered pitching your product to tour/excursion companies for additional and/or alternative revenue streams? For example, let's say there is a theme park 30 miles from a car hire point - the theme park may be willing to pay you to be listed on your app as an excursion, as you would essentially be offering them an advertising package.

This additional revenue could simply be added to your revenue from the car hire companies or you could instead offset this additional revenue by reducing the price of your app (or ideally offer it for free).

If you could offer your product for free to the hire companies, then I'm sure you would be able to pitch it to them with relative ease - you are basically giving them something for nothing. Likewise, this should open you up to a much larger customer base. For example, if people are told they have to pay €X for the app, 9 out of 10 may turn it down. Whereas, if it is included for free in their hire package, then all 10 could make use of it if they decide to.

This business model is fairly popular in the technology industry. For example, the likes of Facebook have proven how profitable a free product can be. They don't charge their users anything, but they still make huge profits by charging businesses to make use of their product for advertising purposes.

Also, this may allow you to do a lot more work remotely from the UK. Most of your initial work would simply involve B2B marketing with tour/excursion companies and could likely be dealt with via cold calling or email marketing (I'm not entirely sure of the laws in Spain regarding this). If some of these businesses turn down the opportunity to be on your app, it is not such a big deal as not securing something like a big deal with a national car hire company, so there may be less need to pitch this face-to-face.

Not having to fly out to Spain (or at least having to spend less time there) would first of all save you money on things like flights, accommodation etc. Also, being in the UK may mean you can split your time between this and other work in the early stages, which may reduce the risk on your part.

Also, relying on many smaller deals should diversify your risk legally as well. For example, let's say you have a contract with a big car hire company. Any loophole/breach of contract could be worth thousands, or perhaps even millions of pounds if you grow to that size. Whereas, if your contract/T&Cs for smaller deals have similar issues, then each issue may only be worth a few hundred or maybe thousands of pounds. Yes, you will have many more contracts, so these issues combined may be worth just as much, but this then relies on every single client finding these issues - it's far more likely that a big company with lots to gain/lose is going to look for and find a loophole than a small client with a relatively minor agreement.

If you could offer your app for free then this should make it much easier to gain a lot of market share and brand recognition (and possibly do so quickly). Therefore, it may not be long before you have tour/excursion companies contacting you to be on your app, rather than you having to market it to them.

Obviously, you know your product better than anyone else, so I'm sure you will choose the best route forward. I just thought I'd mention this though in case you haven't already considered this option.
 
Needhelp

Needhelp

Active Member
Verified Member
I have just had a couple of extra thoughts:-

  • How does Brexit impact your ability to trade in the EU from the UK? Would you need a Spanish office?
  • If you can identify where a person is (then show them excursions, tours etc in the area) does this bring your app under the Data Protection Laws? Just a thought
 
G

Goingitalone

Member
Verified Member
While I see the potential if your App works I honestly think you would be better off with a huge influential partner or even licensing your product. If it is as big as you think, how could you afford the marketing budget let alone the maintenance/customer services side?
 
D

DataGuardsman

New Member
The point made by NeedHelp about GDPR is a good one. I imagine there are other similar apps but from what I have seen they are not GDPR compliant and Spain is particularly extreme in the level of fines it issues for breaches of the rules (there are 99 rules and only 1 is about actual protection of data, the rest are about how to legally capture and use data). Also any decent rental company will want to see the app is GDPR compliant - so it will give you competitive advantage. Also remember that each person whose data is captured by the app (if it is not GDPR compliant) will be able to claim about £1,000 in compensation. That also goes for the UK.
 
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