Taking Your Franchise System to the United States

Franchising is a dynamic and rapidly growing industry, here in Canada as well as internationally. That said, it will come as no surprise that American franchisors in particular, have been quite successful in recent years. Statistics show that retail sales from franchise outlets in the US comprise over forty percent (40%) of all retail sales in the country, bringing in nearly $850 wholesale nfl jerseys billion a year for their owners.Canadian franchisors are increasingly realizing the economic benefits to be gained wholesale jerseys by expanding their franchises south of the border. Canadian chains such as Molly Maid, Magicuts, Uniglobe Travel, Manchu Wok, Speedy Muffler King and mostly recently Tim Hortons have all acquired successful outlets in the US. Other well known Canadian franchises are following suit.This article is intended to provide a primer on cheap jerseys the advantages and disadvantages as well as the complexities of moving your franchise into the United States. Whether you decide to expand or not will ultimately be up to you, but if after reading this article you are seriously contemplating a move, we would be happy to assist and guide you from a legal perspective.2. Why move to the US?The first question you should be asking yourself cheap jerseys is move at all? Franchise owners such as yourself have diverse reasons for wanting to expand internationally. There are no right or wrong reasons to make the move, only right timing. Smart franchisors will only seriously entertain international prospects after establishing a strong and profitable franchise base at home and intensively researching and planning for an expansion. Maybe most importantly, smart franchisors and their executive teams will be committed to making their cheap jerseys business work on an international scale.The American market is particularly appealing to Canadian franchisors for many reasons, the obvious one of which cheap nfl jerseys is its sheer size. Canadian franchisors have come to recognize and appreciate that Americans have a deep rooted familiarity with franchising, have high disposable income and enthusiastically embrace new products. The US also offers the advantages of close physical proximity, easy market accessibility and little or no language and cheap jerseys cultural barriers.Like with any market, however, there are drawbacks to franchising in the US. Because of the regulatory environment, the size and the diversity of the market, moving to the US can be quite costly. State registration fees alone cost approximately $15 000 (Canadian funds), while the preparation of disclosure documents and franchise agreements can easily come to $30 000 (Canadian funds). Prospective franchisors must also keep in mind that the American market is extremely competitive, considerably more so than its Canadian counterpart.With the right product(s) and/or service(s), right people and right system in place, however, Canadian franchisors such as you may thrive in this profit driven environment. In fact, not only is a successful move likely to boost your business on the whole, it may boost your Canadian operations specifically. Prospective franchisees everywhere are looking to invest in a growing company with its eye on the global arena.3. What you Need to Know (from a legal perspective).3.1What is a Franchise?Although the definition of a franchise varies by jurisdiction, as a general rule, cheap jerseys a business will be considered a franchise and be subject to pre sale registration and disclosure obligations if it meets three criteria:The franchisee business is substantially associated with the franchisor trademark.The franchisee is required to operate his business following a marketing plan prescribed in substantial part by the franchisor.The franchisee is obligated to pay money to the franchisor or its affiliates for the right to engage in the business. Almost any monies paid to the franchisor or its affiliates can satisfy this element, except for the purchase of inventory at bone fide wholesale prices.A number of jurisdictions exclude cheap jerseys from the registration and disclosure requirements certain business relationships that technically meet the definition of a franchise. Examples of excluded relationships are general partnerships, employer employee relationships and fractional franchises (where the franchisee has experience in the franchised business and the franchised business will account for less than 20% of the franchisee sales).A number of states also permit certain franchisors to sell franchises without registering the Offering Circular in that state, although the franchisor must still provide disclosure to a prospective franchisee. The most typical registration exemption is for sales of franchises by a franchisor whose net worth exceeds a certain level (generally $5 million) and who is experienced in the franchised business.Since the definition of a and the applicable exclusions and exemptions vary, a business relationship may be considered a franchise in some jurisdictions, but not in other jurisdictions.In the US, there are franchise laws at both the state and federal levels regulating the manner in which franchises are offered and sold and prohibiting franchisors from engaging in certain inappropriate conduct when dealing with their franchisees. There are also a number of other laws that may apply to franchising. It is critical that you understand the legal implications of franchising in the US before signing any franchise agreement(s).3.2 Franchise Laws3.2.1 State Franchise Registration and Disclosure LawsCurrently, fifteen states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington and Wisconsin. Most state laws define a franchise as an agreement between two or more persons by which a franchisee is granted the right to offer, sell or distribute goods and/or services under the franchisor marketing plan or system; the operation of the franchisee business is substantially associated with the franchisor trademark(s); and the franchisee is required to pay a franchise fee of $500 or more. Some states provide exemptions for certain franchise arrangements including franchises and sales to existing franchisees.All fifteen states require pre sale disclosure to prospective franchisees. Pursuant to the New Uniform Franchise Offering Circular Guidelines ( you are required to provide comprehensive disclosure regarding: yourself, your predecessors, officers, directors and salesmen; the franchise being offered; the terms of the franchise relationship; projections of actual or average results of operation of franchised and/or franchisor owned outlets; and their financial statements or those of their parent.All fifteen franchise law states but Oregon also require some form of pre sale franchise registration or notification with a state administrator. Registration may be denied or suspended if you fail to comply with the law; fail to meet the conditions of registration required by statute; have inadequate financial resources; employ personnel with unacceptable backgrounds (that is, with a criminal or administrative litigation history); offer a franchise with fraudulent or deceptive elements; or offer a franchise with unfair or inequitable terms.As a prospective franchisor in one of these states, it is important to note that disregard of these requirements can result in civil liability and the imposition of severe criminal penalties.3.2.2 Federal Franchise Disclosure LawsThe Federal Trade Commission ( trade regulation rule also requires pre sale disclosure of certain relevant information to prospective franchisees. Unlike many states, however, the FTC does not require pre sale registration of franchise agreement(s). It should be noted that the FTC rule does not pre empt state regulation, except to the extent that such regulation is inconsistent with the provisions of the rule.The definition of a under the FTC rule is similar to that under state franchise laws, except that it also covers opportunity ventures Franchises which fall into one of the following categories are exempt from all compliance regulations under the FTC rule: fractional franchises; leased departments; minimal investments; and oral agreements.Penalties for disregarding the FTC rule can also be quite severe. The rule may be enforced either in an administrative proceeding, leading to the issuance of a cease and desist order and civil penalties of up to $10,000 per violation, or in an action for an injunction and damages before a federal district court. There is no recognized private cause of action under the FTC rule, however. As a result, many states have enacted FTC Acts to allow parties to bring a private action when harmed by an FTC violation. wholesale jerseys wholesale jerseys from china Cheap Jerseys china Cheap Jerseys free shipping cheap jerseys cheap nfl jerseys wholesale nfl jerseys from china wholesale jerseys Cheap Jerseys free shipping wholesale nfl jerseys from china.