Model contracts & clauses

New ICC guide helps businesses step into international franchising

  • 7 May 2014

The International Chamber of Commerce (ICC) has published a practical guide to help business people understand why, how and when to use franchising to expand into new foreign markets.

Entitled UsingFranchising to Take Your Business International: ICC Strategies and guidancefor master franchising, area development and other arrangements, the new ICC guide gives legal and business advice for each step of the process, from defining an international expansion strategy, through to finding franchisee candidates and signing legal agreements. There is also help with planning an exit strategy.

Emily O’Connor, Senior Policy Manager of the ICC Commission on Commercial Law and Practice, edited the guide by pooling expertise from franchising practitioners and academics in North America, South America, Europe, Asia and beyond. She said: “Businesses can benefit enormously from going international, in terms of profits and brand awareness. Franchising allows growth and support using local companies’ capital, but it’s complicated, and risky. So we decided to produce a reliable guide to international franchising, drawing on the experiences of specialists around the world.”

Designed mainly for franchisors already running a successful multi-unit operation in one market, Using Franchising to Take Your BusinessInternational is also useful for any lawyer involved in international franchising.

One pressure on companies to expand internationally is the rapid spread of ideas across borders, explained Anders Fernlund, who co-chaired ICC’s Taskforce on Franchising: “If you’re not part of the global expansion, you can be sure that someone else will take advantage of that and copy your business without you getting any remuneration”.

Fellow co-chair Marco Hero added: “Ideally a franchisor would consider going international by the time it has filled its own market and has significant control of the home market. However that’s an ideal approach. Many franchisors face this question earlier by getting offers from abroad. Our guide tries to give answers to both situations.”

He said: “The risks involved in going international with a franchise system are comparable to virtually any international business strategy. However, especially in franchising, other, softer aspects have a great impact on your success going international, such as cultural differences, language barriers, import-export, tax issues, supply chain, and so on.”

ICC’s guide steers the reader around international franchising pitfalls such as money laundering, disputes and unexpected costs. Packed with market and financial research, there is also advice on legal planning, local laws and regulations, intellectual property issues, public policy, and laws with international application. Businesses searching for the best approach will also find sample country-specific information and checklists for three main contract types used for international expansion – Master Franchising, Area Development and Sub-Franchising.

This guide is the latest in ICC’s wide range of publications to help international business. From handy guides and reference books, to international trade rules and practical model contracts, the ICC Store provides tools for all areas of international business.

Buy Using Franchising to Take Your Business International: ICC Strategies and guidance for master franchising, areadevelopment and other arrangements at the ICC Store

Also available: ICC Model International Franchising Contract, 2011 Edition