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Our Legal support
Our FPI member for legal advises - Marco Hero - is specialized and experienced in international franchise legal affairs:
Marco Hero
Marco Hero is a young and agile lawyer working in one of the largest law firms in Europe specialized in Franchise with a local branch office in Munich. He is specialized in international legal matters and member of several legal councils in different parts of the world. His main focus is franchise law in Europe, USA and China.
Attorney Marco Hero is a partner at Schiedermair Rechtsanwälte in Frakfurt and works in the franchise and distribution practice group. He assists German and foreign companies, predominantly franchise systems, in connection with expansion steps. This encompasses advising start-ups up to the conceptual design of global contract concepts. Advisory focal points are national and international franchise & distribution law and purchasing law, as well as the connected areas of industrial property rights, competition law and cartel law. Conceptual focal points are the establishment of and accompanying advice to franchise systems, as well as purchasing in and sales to Asia and Eastern Europe.
Marco is a member of Unifran, an alliance of specialist franchise law firms around the world that provide legal advice to franchise systems which do business, or plan to do business internationally.
Marco Hero
Schiedermair Rechtsanwälte Escherheimer
Landstraße 60 60322 Frankfurt am Main
hero@schiedermair.com
+49 (69) 95508 330 (direct line) +49 (171) 31 05422
(mobile)
CANADA
The Gateway to
Franchising in North America
EDWARD (NED)
LEVITT*
As the birthplace of modern franchising, the United
States is often at the forefront of franchise developments, such as franchise
specific legislation, the growth of multi-unit franchising, using the Internet
to market franchises, etc. In this
vein, over the last decade or two, U.S. franchisors have ignited the world’s
interest in international franchising.
As franchising in countries outside of the U.S. continues to grow in
size, scope and economic impact, these franchise systems, like never before, are
attempting to penetrate the rich and fertile U.S. franchise market. Unfortunately, this is one endeavor that
really looks much easier than it is and the U.S. foreign franchisor graveyard is
large and getting bigger. How can
the odds of success be improved?
The answer is so very simple; start in
Canada.
Canada’s proximity to the U.S. franchise behemoth
has historically positioned it as the first destination for international
expansion by U.S. franchisors. U.S. franchisors find a great deal that is
familiar in Canada, but with enough challenges to start to build their
international resources and expertise. What makes all of this even more
fascinating is that it works beautifully for franchise expansions into North
America . Foreign franchisors, particularly from Europe, see Canada as being a
unique entry point into the North American markets. They find Canada, on many
levels, more familiar and compatible to them, as they hone their international
expansion skills, take the measure of and prepare for the unique characteristics
of the U.S. market.
Canada has more successful master franchisees of
U.S. brands and more experienced master franchisees generally than anywhere on
the planet. This means that there
are many Canadians who are comfortable with and receptive to purchasing master
franchise rights from foreign franchisors no matter where they come from. Canadian tastes, preferences and
culture are very similar to the U.S. and at the same time we Canadians celebrate
our deep multi-cultural heritage.
This leads to a very unique opportunity for foreign franchise systems to
learn the do’s and don’ts of franchising in North America and to adapt their
concepts in a more receptive market before jumping into the highly competitive,
fast moving and challenging U.S. market.
Even though Canada is vast geographically, its population is concentrated
in and around just a few major cities, which are in close proximity to even
larger U.S. population centers.
Canada and the U.S. are each other’s largest trading partners, so the
economic veins and arteries of the two countries often flow more North/South
across the border than East/West within each country. English is the common language in both
countries, but French is the common language in the Canadian province of Quebec
and Spanish is spoken in many parts of the
U.S.
While not a perfect match, the financial performance of a business in
Canada is usually indicative of what the U.S. experience would be and, if there
is any difference, the U.S. results are likely to be better. This allows a franchisor to use Canadian
financial success as a validation for U.S. projections. While six of Canada’s ten provinces have
franchise disclosure legislation (many more states in the U.S. and the federal
government have such legislation), there is no requirement for registration of
the franchise disclosure document with any government body in Canada, as is the
case in fourteen of the U.S. states.
This, combined with the well-known Canadian politeness (resulting in less
franchise litigation than in the U.S.), the legal spend for franchisors is often
considerably lower in Canada than in the U.S.
Financing is another key element in expanding a franchise system in
the North America. Here too, Canada
and the U.S. are similar but, at the same time, different. Both countries have government backed
small business loan programs and the nature of lending broadly follows similar
patterns and requires similar criteria in both countries. However, in the U.S. there are far more
sources of capital than in Canada and the appetite for risk is considerably
greater in the U.S. Therefore, from
a finance point of view, a franchisor expanding from Canada to the U.S. will
find that their financial skills developed in Canada will serve them very well
in the more relaxed U.S. financial game.
Finally, prospective U.S. franchisees will be very comforted by
demonstrated acceptance of a franchise concept in Canada. Even if a franchise concept is
successful in, say, Europe, prospective U.S. franchisees will want to know that
the concept transitions well into the North American
market.
Having said all of this, any franchisor adopting a Canada first
strategy for entering North America should follow all of the best practices for
international franchise expansion, including good market research, adaptions of
the concept, securing solid supply sources, legal compliance, trade mark
protection and dedicating sufficient human resources, to mention a few. The nice bonus is
that such practices will not only make the expansion from Canada to the U.S.
safer, better and faster, but also less expensive, as some of the development in
Canada will apply to the U.S. or will be adaptable at a reduced cost.
* Edward (Ned) Levitt
is a Certified Franchise Executive, a partner at Dickinson Wright LLP, Toronto,
Canada, and provides legal services to Canadian and international clients on all
aspects of Canadian franchise law.
He was General Counsel to the Canadian Franchise Association (2000-2007)
and is a member of the American Bar Association Forum on Franchising, the
International Bar Association and the International Committee of the
International Franchise Association.
As a member of the Ontario Franchise Sector Working Team, Ned was
instrumental in the creation of Ontario’s franchise legislation and has had
significant input in the franchise legislative process throughout Canada. Among his many publications is the
leading text, Canadian Franchise
Legislation (2001, LexisNexis/Butterworths). Ned can be reached at 416.646.3842 or
nlevitt@dickinsonwright.com.