Legal aspects when you expand

Once the decision has been made to do business abroad, the form of your overseas operation will be determined by your business objectives, available resources and other tax and legal considerations. Keep in mind, however, that no single form may satisfy all your company’s needs. To select the arrangement that is most compatible with your objectives, become familiar with the advantages and disadvantages of the principal forms of doing business overseas and the major legal issues arising from each one. Here you have some legal aspects to bear in mind when you expand.

1. There’s no single marketplace

If you have a product that’s working and making money, most opportunistic entrepreneurs will agree it makes sense to take it to a wider market.

Expanding internationally is exciting and rewarding, but the hard reality is that every country in which you operate is different. It’s impossible to know all the variables you’ll encounter until you get started.

Cultural barriers, legal variances, conflicting values, and wildly different sales cycles are often just the tip of the iceberg. Language, too, is nuanced and can mean very different things in different places. Even when both parties are speaking English, it’s difficult to be sure you are aligned; questions can be raised as to whether you’ve really agreed to a deal or whether the other party is simply being polite.

2. Employment laws

Running a global business means you will employ staff in different locations. Employment laws differ substantially from jurisdiction to jurisdiction and are usually applied strictly by the local authorities. Making sure you comply with all relevant wage, health and safety and other legal requirements is a must for the proper operation of your business. Here are a few other key legal considerations covered by LegalVision.

3. Legal systems

Another important issue for businesses that operate on an international level is the respect for the fundamental difference between legal systems. There are generally two legal regimes – the Civil law and the Common law systems. The UK and USA are representatives of the common law culture, where legal precedent is the leading factor. Continental Europe is the core of the Civil law countries, where mandatory legal rules are the primary source of law.

The discussion of the differences between the two cannot be even slightly touched in such an article. As a basic consideration, it is worth knowing that such differences exist, and not to be surprised if the legal regime looks greatly uncommon to your previous experience when operating in a different jurisdiction.

4. Trademark protection

Generally, trademark laws and rights are based on actual (or bona fide intent to) use in a given country. Unlike international copyright, your properly-registered domestic trademark does not automatically confer any trademark rights in other countries. Take steps to ensure the availability and registration of your trademarks in all targeted markets.

Also, make sure your trademark translates effectively in the targeted country and native language. Many growing businesses have had to modify their names, designs or slogans because of translation or pirating problems in new markets. For example, many U.S. automotive services franchisors had to retool trademarked brands that over-emphasized speed, because automobile owners overseas valued attentive, quality service over fast service.

Running an international business is an exciting endeavour but you must make sure your business complies with all legal requirements. Otherwise, you could find your business being derailed because of it.