2. Repurposing Domestic Franchise Agreements for Brand Export
Jenny Buchan
Associate Professor, Business School, UNSW

3. Repurposing domestic franchise agreements
Cultural fit
Intellectual property
Structuring the international franchise program
Tax
Specific national laws and codes
Domestic franchise agreement
If only someone had mentioned that!
Contingency planning

4. MOOC Expert Video

5. 1. Cultural fit Globalisation
Current differences – eg: language, etiquette, consumer behaviour, risk taking, attitude towards control, women!
Legal culture – eg: long term contracts, dispute resolution, legal system, role of lawyers

6. 2. Intellectual property

7. Should versions of the TMs be registered in different alphabets?
Are there any problems with the TMs in the language(s) of target countries?
Should versions of the TMs be registered in different alphabets?
Any prior applications/uses/registrations of the mark in target countries
Single country or multi-national registration of TMs
Once registered, can you licence the mark in the target country?
Priority for first to use or first to register?
Any local laws that require a TM be licensed for a minimum duration?
Eg: Malaysia – 5 years.
How can franchisor enforce its IP rights?

8. 3. Structuring the international franchise program
Joint Venture
Franchisor enters into a joint venture with local company.
The parties retain independence beyond the venture. 
Area Developer
 purchases the rights to develop and own an exclusive area development territory, and then sells portions of this territory to new sub-franchisees. Area developers may establish their own units.
Master Franchisee
  signs local franchise agreements, pays a franchise fee and ongoing royalties to the franchisor and collects royalties from franchisees. 
Direct Franchising
franchising units directly from the franchisor's home jurisdiction
Branch Office
Franchisor establishes a branch office in the target country and appoint unit franchisees.
Relocation
  franchisor lives in the target country and appoint unit franchisees. 
 In some cases a master franchisee may appoint an area developer to assist with recruitment of unit franchisees.
© UNSW Australia

9. Direct franchising used: when:
Target and home countries are close geographically
Very high sunk costs –e g hotel
Very simple business that needs little ongoing franchisor input
Testing the water

10. 4. Tax Does target impose withholding tax on fees paid to franchisor?
Are there tax exemptions for specific systems?
Is there different tax treatment of TM licence fees vs technology licence fees and service fees?
Double tax treaty?
Will franchisor’s home jurisdiction treat any withholding tax as a credit or allow it as a deduction?
Does the country tax franchisor’s worldwide income?
Transaction taxes? (eg VAT)
Tax ramifications of local branch/subsidiary with employees in target country?
How do contracts need to be drafted to ensure royalties not reduced by tax?
Is tax planning advisable?

11. 5. Specific national laws and codes
Types:
Anti-trust
Foreign trade and investment
Franchise regulations.
Disclosure and cooling off rights
Relationship
Registration and other aspects
Compliance program must be set up to track compliance

12. 6. Domestic franchise agreement
For international franchising you should really decide on setting up documents which can go everywhere. (Gilles Menguy)
Minimum term?
Are good faith and unconscionable conduct recognised?
How is data protected, and by whom?
Dispute resolution
Governing law
Termination provisions – explicit requirements can exist

13. 7. If only someone had mentioned that!
Ramifications of registering franchise agreements in Middle East as commercial agency agreements– not mandatory but benefits local and disadvantages franchisor in event of termination
Any special legislation that affects franchising? Eg Macron Act 2016 in France
Differences between litigating in civil law and common law jurisdictions
Post termination restraints

14. 8. Contingency planning
Keystone Group collapses into receivership; Jamie’s Italian, Kingsleys and Chophouse among 17 venues for sale
Eloise Keating SmartCompany,

15. Resources
Mark Abell, The Franchise Law Review (Law Business Research, 2nd ed, 2015)
Marco Hero (ed), International Franchising: A Practitioner's Guide (Global Law and Business, 2010)
Will K Woods (ed) Fundamentals of international Franchising (ABA, 2nd ed, 2013)