One of the biggest challenges for any business is offering a popular product or service while also standing out from the crowd. To succeed, businesses need to strike just the right balance between familiarity and novelty—and this is one of the reasons why franchising is so popular. Strong franchise systems offer a recognizable brand coupled with unique (often proprietary) and in-demand products and services.
But, what if you buy into a foreign franchise system that is seeking to expand in the U.S. from overseas?
As franchise lawyer Jeffrey M. Goldstein explains, there isn’t necessarily anything better or worse about buying into a foreign franchise system. As with all franchise opportunities, the key is to conduct thorough due diligence, evaluate your individual chances of success and make an informed buying decision. While foreign brands might not be instantly recognizable for the majority of the U.S. population, their unique concepts and the lack of market saturation (combined with a strong system and leadership team) could have strong profit potential.
Cooking Classes and Dart Lounges: Franchise Times Highlights Foreign Franchise Concepts Coming to the U.S.
The Franchise Times recently published two articles highlighting foreign franchise systems that are banking on finding success in the United States. The first is Little Kitchen Academy, which the publication describes as, “a Montessori-inspired cooking class program for children aged 3-18,” that was launched in Vancouver, Canada in 2019. The second is Oche, a “gastro pub and gaming concept open in several major European cities.”
Both franchise systems believe they have what it takes to succeed on U.S. soil. “What millennials and Gen Z are looking for is something more than just eating and drinking when they go out,” says Oche’s CEO according to the Franchise Times. According to one of Little Kitchen Academy’s founders, their concept “allows . . . children to feel freedom and confidence in exploring their internal needs . . . where they refine their senses and they learn how to speak to their needs and their inner urges to grow into these beautiful humans.”
But, for prospective franchisees, is it worth the investment? Without an instantly recognizable brand, does it make financial sense to pay an initial franchise fee and ongoing royalties? As with most questions regarding franchise opportunities, the answer is, “It depends.”
Buying into a foreign franchise system also presents some unique potential risks from a legal perspective. Will the franchisor have an adequate understanding of franchisees’ rights in the U.S.? If franchisees need to take legal action, will they be able to pursue claims against a U.S. entity, or will they need to go abroad? Since the system is untested in the U.S. market, will franchisees have adequate options to exit the system if the franchisor is not able to build a strong domestic presence? These are all important questions that prospective franchisees will need to consider as well.
Discuss Your Franchise Opportunity with National Franchise Lawyer Jeffrey M. Goldstein
If you are thinking about buying into a foreign franchise system and would like to know more about the legal risks involved, we invite you to contact us for a free initial consultation. Call 202-293-3947 or send us a message online to request an appointment with national franchise lawyer Jeffrey M. Goldstein today.
This article is provided for informational purposes. Goldstein Law Firm does not recommend or endorse any individual franchise opportunities.
