International Franchising

One thing I am learning with this blog is the areas of law I need to discard. This will probably be my last post on franchising law. What drives my practice is leading me to direct more attention to other areas. I will be happy to take on any new cases from franchisors or franchisees but I will write less on the subject.

One area that I never dealt with but have had an interest in was international franchise operations. This month's Franchise World published an article on the subject,
In the international arena there is no substitute for good prior planning and judgment.

"When U.S. franchisors structure international franchise arrangements, they too often take the domestic approach that they are accustomed to, only to later realize that the rules change and that engaging in disputes in foreign adversarial proceedings can be substantially more difficult, expensive and time consuming than the domestic judicial battles to which they are accustomed. Many franchisors find that a domestic kitchen-sink approach to drafting international franchise agreements is frequently a “turn off” to prospective international franchisees. In many cases, broad inclusion of standard domestic requirements appropriate for a domestic arrangement could be characterized as a knee-jerk response, wholly inappropriate for an international transaction setting the arrangement up for immediate confrontation or failure, simply due to lack of forethought. For example, provisions governing events of default that subject the franchisee to automatic termination without notice, mandatory contributions to advertising funds, mandatory accounting reviews, certain concepts of equity and even jury trials are not always appropriate for inclusion in international franchise agreements. Such forced inclusions by the franchisor are often an initial recipe for disaster."