Are there any requirements for payments in connection with the franchise agreement to be made in the local currency?

Franchise & Licensing

Angola Small Flag Angola

When franchise agreements are concluded between two Angolan entities, the payments made in connection with the same must be made in local currency only, i.e. Angolan Kwanza; in case of franchise agreements concluded with foreign franchisors, parties are free to choose a foreign currency (such as USD or EUR) as the relevant currency of the contract, however, the effective payments due under such contracts, depend on its availability at the local commercial banks.

Canada Small Flag Canada

No, the franchisor may require their franchisee to make all payments in a currency other than the Canadian dollar. Franchisors should consider, however, if this will prove to be a serious burden on a franchisee’s ability to conduct business, or otherwise dissuade potential franchisees from joining the system. The franchise agreement must specify the currency in which payments are to be made.

Chile Small Flag Chile

No.

Denmark Small Flag Denmark

There are no restrictions under Danish law on the franchisee's ability to make payments to a foreign franchisor in the franchisor's local currency.

Azerbaijan Small Flag Azerbaijan

There are not any requirements

Egypt Small Flag Egypt

The currency of payment shall be as agreed by the parties of the franchise contract, however, if the contract’s parties are Egyptian payment shall be made in EGP currency according to Article (42) of the Executive Regulations of the CBE Law which states that “ Dealing in commodities and services by purchase and sale within Egypt shall be conducted in Egyptian pound, according to the following rules: a- Dealing in terms of the Egyptian pound shall not violate any of the terms stipulated in any contractor, supply or services contracts concluded with a foreign party, provided that dealings are conducted through the banks authorized to deal in foreign exchange… etc.”

France Small Flag France

No.

Greece Small Flag Greece

There are no such requirements; it is left upon the parties to agree on the currency to which payments will be made.

Mexico Small Flag Mexico

The parties to a franchise agreement may freely agree to set and make payments in any currency, but if the payment is to be made within Mexican territory pursuant to such agreement, then in terms of the Monetary Law, the party making the corresponding payment is entitled to decide to do it in the agreed currency (e.g. US dollars) or in Mexican currency (pesos) according to the exchange rate published by Mexico’s Central Bank in the Official Gazette of the Federation on the date of payment.

If the payments are to be made abroad pursuant to the relevant agreement, the party making the payment shall be obliged to do so in the agreed currency (i.e. US dollars).

Lebanon Small Flag Lebanon

The principle is found in Article 301 of the Code of Obligations and Contracts which states: “When the debt is a sum of money it must be settled in the currency of the country. In normal times and when the official rate has not been assessed for fiduciary money, the parties are free to stipulate that payments shall be effected in specified coins or in a foreign currency.”

According to the above article, payments in connection with the franchise agreement may be made in the local currency or in a foreign currency.

China Small Flag China

It depends on whether cross-border payment is involved. The payment currency shall be local currency only if made to the domestic franchisor, In the event that the franchisor is foreign company and cross-border payment is necessary, the franchisee may purchase relevant foreign currency in compliance with the PRC foreign exchange laws and regulations, and then make payments for the agreed franchise fees, royalty fees, commodities purchase fees, etc.

Peru Small Flag Peru

No, there are not requirements for payments in connection with the franchise agreement to be made in the local currency. In fact, Article N°1237 of the Peruvian Civil Code states that obligations may be made in foreign currency.

Philippines Small Flag Philippines

There are no specific requirements for payments arising from a franchise agreement to be made in local currency.

New Zealand Small Flag New Zealand

No but invariably New Zealand dollars are prescribed.

Russia Small Flag Russia

Russian currency control law or civil law do not prohibit the use of a foreign currency in international franchising deals. According to Article 317 (3) of the Russian Civil Code, the use of a foreign currency under financial obligations is allowed in the territory of the Russian Federation.

Norway Small Flag Norway

Payments can be agreed and made in any currency. However, the parties should consider agreeing on exchange rates clauses for example by referring to relevant exchange rates offered by a named bank, between the local currency and the agreed currency as a method for settling any possible exchange rate issues. The parties can also consider opening separate bank accounts, denominated in specific currencies for receiving payments in the relevant currencies, to avoid exchange disputes upon payment.

United States Small Flag United States

No. While a foreign franchisor will often (but not always) choose to establish a separate business entity formed in the United States to serve as the franchisor of its United States franchise system, and therefore require payments of royalties and other fees in local currency, this is not an actual requirement. A Foreign franchisor may require its United States franchisees to make royalty and other payments in the franchisor’s currency of choice. However, a foreign franchisor who is requiring payment to be made in foreign currency should be sure that its franchise agreement expressly provides for such currency requirement, clearly indicates how and according to which lending institution the currency conversion rate will be established, and provides for the imposition of any exchange controls that prohibit/impede such conversions.

Italy Small Flag Italy

There are no requirements for payments in connection with the franchise agreement to be made in the local currency.

United Kingdom Small Flag United Kingdom

There are no exchange controls or restrictions on foreign currency payments in the UK. However, the currency, rate and time of the conversion for payments, and provisions dealing with withholding taxes, should be clearly specified in the franchise agreement.

Updated: October 15, 2019