INVESTING IN A FRANCHISE TO SUCCEED IN THE UNITED STATES

INVESTING IN A FRANCHISE TO SUCCEED IN THE UNITED STATES

INVESTING IN A FRANCHISE TO SUCCEED IN THE UNITED STATES

Investing in a franchise to succeed in the United States

The United States is a land of business. As a foreign investor, the idea of starting your own business from scratch can be daunting. Fortunately, there are franchises in many fields and with entry fees to suit all budgets. Here are our tips for investing in a franchise in the United States.

Investing in a franchise to succeed in the United States

American legislation

In terms of legislation, franchise agreements are governed by the laws of the Federal Trade Commission (FTC) at the federal level. They are the equivalent of our Doubin Act. These laws essentially govern contractual information, particularly for franchisors. Indeed, they must provide candidates with the Franchise Disclosure Document (FDD) at least 10 days before signing the franchise agreement. This is the equivalent of the DIP in France, but much more comprehensive. In the United States, it contains 23 mandatory items and is approximately 500 pages long. It includes:

The list of active franchisees and those who have left the network over the last three years with their contact details

Procurement methods for purchasing products, but also for equipment required for operation

The state of the market

The franchisee's exclusive area

The conditions for renewing the franchise contract

The amount and terms of the entry fee

The operation of computer systems, advertising and training

Patents and copyrights, …

Like the DIP in France, the FDD should allow the future franchisee to get a clear idea of the network they plan to join. While this document is a good starting point for discovery, it's still necessary to seek expert advice. They will help you delineate risks and local specificities. In addition to FTC laws, each state is free to adjust the obligations of the franchisor and franchisee during the post-contractual period.

Read also: How to invest in the USA with my foreign company?

What formalities are required for doing business in the USA?

No matter what business you want to start, you'll need a visa. To do this, you need to arrive with a well-developed project. Business plan, search for premises, franchise agreement, etc., the formalities are often lengthy. While it's possible to complete these steps alone, it's still advisable to seek professional help (accountant, lawyer, etc.). Here too, be careful, as each state has its own corporate law.

Regarding the visa, the most commonly used in this case is the E-2 investor visa. This is a long-term, renewable work visa granted to foreign nationals from a country that has signed a bilateral investment agreement with the United States. To obtain this visa, the investor must create or acquire a business in the United States and manage the legal and commercial entity.

Here are the conditions to be eligible for the E-2 visa:

Hold at least 50% of the shares of the American company created or acquired

Provide proof of an investment amount that can cover the costs of launching and developing the business

The funds must come from equity or a loan secured by a mortgage belonging to the investor

The franchise must contribute to the development of the local economy. It must therefore generate jobs for American workers and generate profits.

Once the application is complete, an interview will be required at the US Embassy in Paris, during which the entrepreneur will have to answer specific questions about their business.