International Franchising requires a sound understanding of the benefits and challenges of the franchise business model, the countries to be operated in and the legal and tax implications. Some of the most common reasons that some franchisees fail are that they do not seek the necessary tax and legal advice ahead of buying a franchise or give due consideration to the territories in which they intend to operate in.
Our franchising experts can assist both franchisors and franchisees in establishing and optimising franchise operations internationally including:
- Franchise operation structure
- Intellectual property usage and protection
- Compliance and the necessary registrations
- International entry strategy
- Franchise documentation
- Legal and tax implications for both franchisor and franchisee
What is International Franchising?
International Franchising is a common method of expanding and growing a business globally. In return for a management fee a franchisor will grant a licence, distribution agreement or agency arrangement to an overseas franchisee. The franchisor in turn, will provide a commercial support package to help them operate that business, normally consisting of permission to use the franchise brand, processes, training and support.
“Business format franchising is the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade as their own business under the brand of the franchisor, following a proven business model. The franchisee is provided with the rights and necessary support to run the business in the correct way, while adhering to the agreed rights and obligations”. – British Franchise Association
Franchising is a complex area of law and, aside from ensuring that a business is franchisable and ready to franchise, choosing the right franchise lawyer is a key strategic decision. The franchise agreement and its processes involves different areas of law to be considered holistically, such as:
- Contract and Commercial Law
- Consumer Regulations
- Competition Law
- Trademark and Intellectual Property law
- Data Protection law
- Tax and Accounting Expertise
The legal documentation, and ongoing legal advice, are fundamental building blocks of any franchise network. The right specialist advice can maximise the chances for long-term success and minimise the risks of incurring big expenses and liabilities down the road.
Benefits of International Franchising
There are many benefits of International Franchising for both the franchisor and the franchisee including:
- Cost – a franchisor benefits from international expansion without them having to carry the overhead costs of employees, rent etc
- International growth – franchising a company to overseas parties enables the brand to grow internationally with limited risks or exposure to just a single country market
- In-country expertise – a franchisee should have good local knowledge of their market, buyer behaviour, business processes and have key contacts in their country
- Faster route to market- The franchisor gets access to an established brand and proven business model which helps them speed up the setup and running of operations in their country
How we can help with International Franchise operations
We have a solid understanding of the international franchise business and have been involved with global brands as well as key franchise development projects. We possess a comprehensive and interdisciplinary network covering the entire franchise sector in Europe, the Middle East and Latam, allowing us to provide international business, finance, tax and legal support.
Contact us to see how we can help
Del Canto Chambers’ team provides in-depth advice on transactions and regulatory matters for the complete range of the franchisor’s and franchisee’s business and legal needs, from establishing and growing systems to managing relationships. Our team also consists of litigators who are experienced at successfully resolving franchise disputes, whether they involve core franchise law or franchise-related litigation.