In trips to Europe, the Middle East, Asia and Mexico during 2010, as part of an international initiative to expand consulting services into these “future-growth” markets, we confirmed the growing acceptance of the franchise model as an exciting yet risky opportunity for small business investors, but one where the risk is well controlled.
There are several European countries, such as Spain, France, Belgium and Italy, with strong franchise disclosure laws. There are also several in the expected high-growth international markets that mix franchise laws with “good faith” laws to enforce fair dealing, including in the pre-contractual due diligence and negotiating period. The areas of concern for the intended franchisee, over and above those of any proposed business investment, may range from issues relating to the termination of the franchise to intellectual property matters, general contract disputes, misrepresentation and fraud. The franchise documents themselves can be intimidating in size, as the franchisor would not want to be penalized for perceived inaccuracies resulting from abbreviation.
Currently, there are over 3,500 franchising opportunities in the U.S. There are estimated to be around 1,000 in each of the UK, Mexican and Brazilian markets and twice that in the European market creating an enormous pool of opportunities for an investor to sift through to narrow down their leads. For many, this will be the one of the largest financial investments of their lives. That is why many of them call on the expertise of a franchise consultant or franchise broker to weed out the more problematic leads and match the intended investor with the best fit franchisor. The service is free to the investor, as the advisor’s services are paid for by the seller (franchisor).






