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445 Hamilton Avenue
Suite 1102
White Plains
NY 10601
Tel: 914-681-0100
Email: info@pitlaw.com

Franchising
Foreign Franchisors Doing Business in the U.S.

Foreign Franchisors Doing Business in the U.S.We have extensive experience representing foreign companies in their business ventures in the United States . We represent companies based in Europe, Canada and Japan. Some of these companies are franchisors selling or planning to sell franchises in the U.S.

An important preliminary consideration for any foreign franchise company entering the U.S. market is trademark registration. The brand should be registered with the U.S. Patent and Trademark Office.

Foreign franchisors that desire to sell franchises in the U.S. commonly form a separate subsidiary company, usually in the U.S. , to operate the franchise business and enter into franchise agreements with U.S. franchisees. This subsidiary company will be the entity that discloses its audited financial statements in the franchise disclosure document. Franchisors in the U.S. are required to prepare financial statements in accordance with generally accepted accounting principles.

We can handle the trademark registration and the corporate formation for foreign franchise companies. If appropriate, we can also draft a license agreement between the parent company and the U.S. subsidiary. Beyond that, we can assist the company in its U.S. franchise compliance in the same way that we assist other franchisors.

The fact that a foreign franchisor has experience franchising outside the U.S. is very helpful in structuring the system for the U.S. launch. However, the U.S. market is radically different than that of most countries. Franchise agreements and offering documents prepared for use in other countries typically must be substantially rewritten to meet U.S. legal requirements and market expectations.

CASE IN POINT: Tom Pitegoff acted as special franchise counsel to Sumitomo Corporation of America in its $1.1 billion acquisition of the tire retailer TBC Corporation in 2005, the franchisor of Big O Tires.