Increasingly, franchise concepts that begin in one country soon find that expansion involves not only domestic growth, but also development in other jurisdictions including the United States. Over the past decade, advances in electronic communication have made this type of expansion even easier. This article’s focus is on the challenges a non-U.S. franchisor will face in entering the U.S. market. The authors consider it an interesting exercise to address 20 questions that any non-U.S. franchisor will have as it considers taking the leap and bringing its brand to the U.S. Some of these questions tackle a mix of business and legal considerations; others are primarily focused on legal concerns. The answers reflect the experiences of foreign counsel who has assisted local clients in entering the U.S. market, U.S. counsel who have advised foreign clients interested in the U.S. market, as well as in-house counsel who has worked to bring an acquired foreign brand into the U.S.
1. Most “foreign brands” that want to enter the U.S. are probably not taking this step (leap) as the first step. We will assume that the foreign brand is franchised in its home country and that the franchisor has already exported its system to other countries, closer to home. Does the franchisor take the same approach when expanding to the U.S. as it did when going into its neighboring countries?
For many non-U.S. franchisors, a presence in the U.S. is a desirable goal. However, it is also a giant leap for most. You leave your familiar environment, the culture you are accustomed to and you take your system far away, to a new continent. Is it just another small step for man or a giant leap for mankind?
Originally published in International Journal of Franchising Law Volume 12 – Issue 2 – 2014.
Co-Authors: John R.F. Baer, Greensfelder, Hemker & Gale, P.C., Chicago, Illinois, United States, Anders Fernlund, NOVA, Stockholm, Sweden, and Jane W. LaFranchi, Marriott International, Inc., Bethesda, Maryland, United States
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