Introducing “Virtual Franchise Events”

Virtual Franchise Events, Inc. is a joint venture of Strategic Growth Concepts and franchisEssentials. The mission of this organization is to utilize the latest technology to assist the franchise industry in achieving growth.  This is accomplished thru the implementation of:

• Virtual Franchise Fairs
• Virtual trade shows for individual franchise organizations
• Virtual franchisee training programs
• Virtual franchisee recruitment seminars
• Franchisor executive presentations to the franchise network
• Franchise product development sessions

Virtual events are conducted entirely online with event organizers, presenters, sponsors, exhibitors, and attendees exchanging information and networking from the convenience of their computers.  These events look and feel remarkably similar to their in-person counterparts while delivering the same knowledge-sharing and personal interactions at a significantly reduced cost and requiring less investment of time and staff resources.

An additional benefit of virtual events for the sponsors and exhibitors is the rich marketing data that they deliver – far more than can be obtained at their in-person counterparts.  The anonymity of attendees roaming the in-person event evaporates; instead, sponsors and exhibitors receive detailed marketing data about attendees, much better than any other marketing vehicle available today.  Further, many virtual event organizers see many more C-level executives than at a physical show because attending a virtual event requires less of a time commitment on their part.

For event attendees, it’s much easier to gather information without having to deal with someone hovering to obtain their business card.  In fact, studies show that attendees are more apt to interact with an exhibitor, speaker or another event attendees online than in-person.  New technologies, including the most business-applicable elements of Web 2.0 and social networking, make it extremely easy for professional networking to occur in virtual events.

Click HERE to download a Virtual Events Fact Sheet.

Click HERE for Virtual Event case studies and industry information.

Soon To Be Announced:

A schedule of national and international virtual franchise industry events. Check back soon for more information.

If your firm would like to learn about the benefits of sponsorship for any of these upcoming events, CLICK HERE for information about the variety of sponsorship opportunities available.

Franchise Facts for Canada

As I continue to work with franchise organizations north of the border, I’m excited by the facts about franchising in Canada.

-The Franchise industry in Canada represents over $100 billion in sales annually
-Franchised businesses account for 40% of all retail sales
-There are over 78,000 franchises across Canada
-Canadian Franchise Association membership grows at a rate of 10% per year
-Franchising directly employs over 1,000,000 people
-Every year, thousands of Canadians are improving their lives by becoming franchisees
-Franchising accounts for $90 billion per year in sales nationally or 10% of Canada’s Gross Domestic Product (GDP)
-Franchising has been reported to account for one out of every five consumer dollars spent in Canada in goods and services

About the Canadian Franchise Association

With almost 500 corporate members nation-wide, representing many of Canada’s best-known brands, the Canadian Franchise Association is the national voice for Canadian franchising and works with all levels of government to ensure the development of industry-made solutions. The CFA promotes ethical franchising and educates Canadians about franchising, specific franchise opportunities and proper due diligence through its many events, programs and publications.

Source: Canadian Franchise Association

Introduction to International Franchising

The following article was submitted by Guest Author, Kathryn Rookes. Kathryn is an experienced franchise attorney and a member of FSB Legal, a virtual law firm. She is one of the very few franchise attorneys in the United States with experience in a government regulatory practice (Maryland Division of Securities), private practice, and as in-house counsel. With this diversity of experience, Kathryn understands the issues that franchisors face on a daily basis.

Introduction to International Franchising
as submitted by Kathryn Rookes, Attorney, FSB Legal

Introduction

Many franchisors perceive international expansion of their franchise concepts to be a great way to generate cash on a short term basis and do not fully appreciate the long‐term commitment that successful international franchising requires. The level of commitment and resources required to expand internationally is often greater than that required for domestic expansion. This article provides a brief overview of the requirements for international franchising and identifies a typical international deal flow process. We also have included several resources that contain additional information for further research.

Evaluate Your Resources

When making the decision to go international, you must consider the additional resources that you will need to successfully expand and support your new international franchisees. Areas of increased costs to consider include telephone and postage, travel, marketing, trademark registration, preparing international franchise agreements and disclosures, costs of goods due to export/import controls, foreign taxes, translations and document registration, to name a few.

Determine What You Will Offer

International deals are normally structured in one of three ways. First are single unit franchise sales (sometimes called direct franchising), much like many systems sell in the United States. The next option is area development rights, in which you identify 1 developer who opens multiple units of its own. The third common option is master franchising (also called sub‐franchising). In this method you identify 1 developer that has the right to open its own units, and also the right to sell additional units to other franchisees. In addition to these three methods, some international arrangements are structured as joint ventures, in which you are an equity partner with your foreign franchisee. Each method has its own risks and rewards, so you must evaluate your goals and your resources to determine which method best suits your needs.

Finding Good Research

Your research on each opportunity generally consists of two areas, research on the territory and research on your prospective franchisees. The internet provides a wealth of information on the territory. The United States Department of Commerce is a good starting point as is its included agency, the International Trade Administration. The trade promotion unit of the International Trade Association, the United States Commercial Service also provides significant help by providing market research, worldwide trade events for promoting your offering, assistance in identifying prospective franchisees, manufacturers and distributors, and individualized counseling on going international.

For research on your prospective franchisees, you are well served to retain the services of one of the many companies that provide due diligence or investigative type services. Research on people and companies in other countries is a very tricky business, as the stability, accuracy and adequacy of information in other areas of the world is often lacking. These companies will be able to evaluate the trustworthiness of the information they obtain, and can educate you on the limitations of the information so that you can make your own decisions on the risks you are assuming by choosing any particular franchisee.

Establishing a Deal Flow Process

The deal flow process for international deals will usually be significantly different from your domestic deal flow process and will necessarily require more time and resources for each deal. We generally recommend the following steps to ensure compliance with Unites States’ and the foreign country’s local law.

1. Determine whether there are any legal or practical barriers for your target country. Legal barriers include the U.S. government’s trade embargos and terrorism sanctions, in which U.S. businesses are prohibited from conducting business in certain countries. You may find this information primarily at the United States Department of the Treasury, Office of Foreign Asset Control website. The primary restrictions involve, as of January 2009, Balkans, Belarus, Burma, Cote d’Ivoire (Ivory Coast), Cuba, Democratic Republic of the Congo, Iran, Iraq, former Liberian Regime of Charles Taylor, North Korea, Sudan, Syria and Zimbabwe. Practical barriers (which also can be legal in nature) might include currency export restrictions (you won’t be able to get paid), prohibitions on foreign investment and/or ownership (you’re not allowed to invest there), lack of governmental infrastructure (you can’t register your trademarks or protect your intellectual property, trade secrets or contract interests due to lack of a stable court system), competition (both laws and actual), taxes (you can’t afford), restrictions on transfer (can’t stop your franchisee from selling out), economic conditions (won’t support your business model) and other such items.
2. Once you have determined that there is no barrier, you should determine whether there is a franchise disclosure and/or registration law in the target country. If there is, you should retain local counsel immediately to draft the necessary disclosure and handle the registration for you. We are happy to assist you with this process.
3. Identify your prospective franchisee and begin your background check on the prospect.
4. Negotiate and document a Letter of Intent that contains the material terms of the new deal. You will normally require a deposit against the initial development fee on the signing of the LOI.
5. Retain local counsel to review your proposed form of agreement to revise the agreement to ensure that it complies with all applicable local laws.
6. Negotiate with your prospective franchisee on any changes to your form of agreement. Once all terms are negotiated, you will finalize the agreement and proceed with signing.
7. Once your agreement is fully signed, you will want to proceed with registering your trademarks in the country, if you don’t already have the marks registered. If you have a large budget for your international expansion, you should ideally move this step up as early as you can afford, even up to step 2 if possible.
8. Once all of the above is accomplished, the real work begins. You now need to arrange for training, import of products or ingredients, site selection assistance, site development assistance, marketing assistance, and all of the other support services that franchisors normally provide.

Summary

With proper planning, international expansion of your franchise system can be an exciting new challenge that brings you many rewards. At FSB Legal, our attorneys are experienced in international franchising and have completed deals in over 35 countries. We are happy to help you begin this journey.