Exchange and International Franchising

Exchange and International Franchising

For those franchise companies who do business internationally, they must consider the currency exchange rates in countries where they do business. Otherwise, large fluctuations in currency devaluations can cause enormous problems in cash flow of the franchise is.

It is for this reason that I decided to add a clause in our international franchise agreements, which addressed this very issue below;

2.6 Currency

All fees, royalties and other payments referenced in this Agreement are stated in the currency of the United States (U.S. dollars). Franchisor All payments due under this Agreement shall be made in dollars. Any fees or payments may be calculated and determined in the currency in which revenues are recognized. However, the payment of all such costs shall be made in dollars based on "exchange rate in effect as of the last day of the date on which such charges or payments are due. As used herein, "exchange rate" means the exchange rate of the currency in which the Gross records the location are denominated and U.S. dollar, as published in the U.S. edition of The Wall Street Journal on the next business day following the last day of the calendar month for which compensation or payment is due.

In case the payment is transferred after the date payment is due, the conversion rate used shall be the exchange rate on the date payment is due or the exchange rate on the date the payment is transferred, whichever rate produces a larger amount in U.S. dollars and regardless of any late payment (as defined in Section 2.5 above) or any other remedy for non-payment or delayed payment of sums due under this Agreement. Franchising will be responsible for obtaining and maintaining all necessary or appropriate governmental approvals or permits allowing the franchise to franchisor to pay in U.S. dollars.