I recently had someone call and enquire about what they needed to do to purchase a franchise overseas. I advised them it was not as straight forward as they might think and that the overseas franchise market was very different to Australia. There were many issues to consider.
These were some of the tips I provided to them:
- Do your due diligence and thoroughly research the franchise, the franchisor, other franchisees in the network (Australian and overseas network), the legislation and the overseas requirements.
- Most countries will have a specific franchise association that has franchising information, details on the country’s governing legislation or Franchising Code, a reference point for locating franchise lawyers for assistance and advice as well as frequently asked questions.
- Locate a specialist franchise lawyer in that particular country, who speaks English and fully understands the franchise laws in that country. Also have your own Australian franchise lawyer to bounce ideas around with.
- Locate websites dedicated to starting or purchasing a business/franchise overseas. These websites will give you details of contact people and information about what will be involved in the particular country you are looking at buying a franchise in. They will walk you through the steps, the legislation and the associations and departments that need to be contacted.
- Look at websites like AusTrade, which might be able to assist in providing information to Australians wanting to start a business/franchise overseas.
- When you do obtain the Disclosure Document Package to review and consider, you will probably be provided with an English translation, as well as the document in the country’s official language. Chances are the English translation is not to be relied upon as an official legally binding document, only the documents in the country’s official language will be legally binding. Because of this, it will be imperative to have a specialist franchise lawyer in the relevant country who understands and speaks both English and the language of the particular country to review the documents.
If you are thinking of embarking on an adventure by purchasing an overseas franchise, please take note of the above and conduct your “due diligence”. If you have any questions on purchasing a franchise in Australia or overseas, please contact me directly for assistance with this form or phone the office on (08) 8410 9294.
Written by Mirella Angelino, BDO & Senior Legal Consultant.