11 March 2025
The global expansion of US fast food chains has been a notable trend in recent years, with significant growth expected in 2025 and 2026. Companies like Chick-fil-A, McDonald’s, Starbucks, and Wendy’s are leading the charge. Chick-fil-A, for instance, plans to invest $1 billion by 2030 to establish locations in Europe and Asia. Similarly, McDonald’s and Starbucks have announced plans to open thousands of new locations in China over the next two years. Wendy’s, on the other hand, is set to make a significant entry into the Irish market, partnering with Corrib Oil to open 10 new restaurants across Ireland between 2025 and 2027.
The success of these chains can be attributed to their ability to “glocalize” – a strategy that involves adapting their offerings to meet local tastes while maintaining their core brand identity. Examples of this include the introduction by McDonald’s of menu items like the McSpicy Paneer in India and the Teriyaki Burger in Japan to cater to local palates. This approach not only helps in gaining acceptance but also fosters brand loyalty among local consumers.
In the United States, franchising is a well-regulated industry with specific laws designed to protect both franchisors and franchisees. The Franchise Rule, enforced at the federal level by the Federal Trade Commission, requires franchisors to provide a Franchise Disclosure Document (FDD) to potential franchisees. Additionally, many states have their own franchise laws that may impose further requirements, such as registration and disclosure obligations.
Provision of the FDD is a critical component of the franchising process in the US, ensuring transparency and providing potential franchisees with the information they need to make informed decisions. It covers a wide variety of information, including the franchisor’s officers, business experience, the competitive landscape, litigation history, initial and ongoing fees, and financial performance representations. This comprehensive disclosure helps mitigate risks and fosters a fair business environment.
Unlike the US, Ireland and many European countries do not have specific laws regulating franchising. Instead, franchising agreements are governed by general commercial laws, including contract law, competition law, and intellectual property law. At the EU level, the European Franchise Federation provides guidelines and a code of ethics to promote fair franchising practices, and certain member states and the UK also have developed similar codes of ethics for franchisors.
Franchise agreements in Ireland are governed by various legal frameworks, such as the Sale of Good and Supply of Services Act, the Consumer Protection Act, and Competition Law. These regulations ensure fair dealings between parties, preventing any actions that could distort competition or take advantage of consumers.
The legal landscape for franchising in Europe is evolving. Countries like France, Poland, Germany, and Italy are considering or have implemented changes in their commercial laws that could impact franchising. For example, France has introduced stricter disclosure requirements. The ‘Loi Doubin’ requires franchisors to provide a pre-contractual disclosure document to prospective franchisees at least 20 days before signing the franchise agreement. This document must include detailed information about the franchisor, the franchise network, and the market conditions.
Similarly, Germany’s franchise laws emphasise the protection of franchisees, with a focus on ensuring fair and transparent contractual relationships. These changes reflect a broader trend towards greater regulation and protection in the franchising sector, which US companies must stay abreast of to ensure compliance.
KPMG Law, with its experience in Irish and EU regulatory laws, is well-positioned to assist US businesses in their expansion efforts. Our skilled legal professionals can provide comprehensive support, from drafting and reviewing franchise agreements to advice on compliance with local laws and regulations. We offer tailored advice to help navigate the complexities of the European market, ensuring a smooth and successful expansion for your franchise.
Our services include advising on intellectual property transferring and assisting with regulatory compliance. We also provide ongoing support to help franchisors manage their international operations effectively. With KPMG Law’s help, you can confidently expand your franchise into Ireland, and the broader European market, leveraging our expertise to achieve your business goal.
