In Short
- Expanding a restaurant overseas involves legal, tax, and regulatory issues that differ from Australia.
- Choosing the right structure affects liability, control, and long-term growth.
- Trade mark protection, contracts, and employment laws must be addressed before entering a new market.
Tips for Businesses
Before expanding, review whether your Australian company structure supports international growth. Decide early whether a subsidiary, franchise, or licensing model suits your risk appetite and budget. Protect your trade marks in each target country and review local employment, tax, and licensing rules before committing to leases or hiring staff.
Summary
This article explains the key legal considerations for Australian restaurant businesses planning international expansion. LegalVision, a commercial law firm specialising in advising clients on corporate structuring, franchising, and cross-border operations, outlines the main regulatory, contractual, employment, and tax issues involved.
Expanding your restaurant brand internationally presents significant growth opportunities, including:
- access to new customer bases;
- enhanced brand recognition; and
- diversified revenue streams.
However, international expansion involves navigating complex legal and regulatory frameworks that differ substantially from the Australian operating environment.
This article provides a practical legal checklist for restaurant owners contemplating overseas expansion, with particular emphasis on corporate structuring, regulatory compliance and commercial contracting.
Starting or managing a food and hospitality business? Download this free guide to learn the key legal essentials, from contracts and employment to data protection and brand protection.
Establishing Your Corporate Foundation in Australia
Before pursuing international expansion, ensuring your domestic corporate structure is fit for purpose is essential. Most Australian restaurant businesses operate as proprietary limited companies (Pty Ltd), which is generally preferable for businesses planning international expansion.
As a separate legal entity, a company limits shareholder liability and provides greater flexibility for capital raising and ownership restructuring. When establishing a company in Australia, you must comply with key requirements under the Corporations Act 2001 (Cth), including:
- registering with ASIC;
- appointing directors;
- issuing shares; and
- maintaining a registered office.
You will also need an ABN and GST registration if your turnover exceeds the relevant threshold.
Selecting the Appropriate International Structure
One of the most significant decisions in international expansion is determining the optimal legal structure for your overseas operations. Your choice will impact liability exposure, operational control, taxation and regulatory compliance requirements.
Establishing a Foreign Subsidiary
A common approach is to incorporate a local subsidiary company in your target market. This structure allows you to maintain full ownership and operational control while limiting liability to the subsidiary’s assets. A subsidiary structure is typically preferred for long-term expansion strategies, particularly where you intend to operate multiple locations. However, forming a subsidiary involves higher upfront establishment costs and ongoing compliance obligations under local corporate laws.
Franchising and Licensing Arrangements
Alternatively, many restaurant brands expand internationally through franchising or licensing arrangements. This model enables rapid market penetration with lower capital investment, as local franchisees or licensees fund and operate individual locations.
Franchise expansion relies heavily on comprehensive franchise agreements that clearly define:
- brand standards;
- operational procedures;
- quality control mechanisms; and
- intellectual property rights.
Many jurisdictions have specific franchise disclosure laws requiring detailed pre-contractual disclosures to prospective franchisees.
Continue reading this article below the formCritical Legal and Commercial Considerations
Regulatory Compliance and Market Entry
Each jurisdiction maintains distinct regulatory frameworks governing restaurant operations, including:
- business licensing;
- food safety and hygiene regulations;
- alcohol licensing regimes;
- health and safety obligations; and
- planning approvals.
Intellectual Property Protection
Your brand assets frequently represent your most valuable commercial property. Before entering a new market, you should:
- register trade marks for your restaurant name and logos;
- secure relevant domain names; and
- protect proprietary recipes and operational materials through confidentiality arrangements.
Trade mark protection operates on a territorial basis, meaning Australian registrations do not automatically extend overseas. You must file separate applications in each target jurisdiction, ideally before commencing operations or publicly announcing expansion plans.
Commercial Contracting
Well-drafted commercial agreements form the foundation of successful international operations. Key contracts include:
- lease agreements;
- supply agreements;
- franchise or licence agreements; and
- employment contracts.
These agreements should clearly address:
- payment terms, quality standards;
- intellectual property rights;
- termination provisions; and
- dispute resolution procedures.
Employment and Workplace Relations
Labour and employment laws vary significantly between jurisdictions. Key employment considerations include:
- visa and work permit requirements for expatriate staff;
- local employment standards, including minimum wages and leave entitlements;
- termination and redundancy requirements; and
- workplace health and safety obligations.
Many jurisdictions provide significantly stronger employee protections than Australia, including restrictions on termination and mandatory severance payments. Understanding these obligations before hiring is crucial in avoiding costly disputes.
Tax Planning and Structuring
International expansion creates complex tax considerations across multiple jurisdictions. Key tax considerations include:
- corporate tax rates in your target market;
- withholding taxes on dividends and royalties;
- transfer pricing requirements for inter-company transactions;
- double taxation treaties; and
- mechanisms for repatriating profits to Australia.
Key Takeaways
Successful international expansion requires methodical planning and careful attention to corporate structuring and legal compliance. By establishing a robust domestic corporate foundation, selecting the appropriate international structure, protecting your intellectual property rights and implementing well-drafted commercial contracts, you can position your restaurant business for sustainable international growth. With proper preparation and experienced legal guidance, international expansion can unlock substantial growth opportunities for your restaurant brand.
LegalVision provides ongoing legal support for Australian businesses through our fixed-fee legal membership. Our experienced lawyers help businesses manage policies, contracts, employment law, disputes, intellectual property and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 1300 544 755 or visit our membership page.
Frequently Asked Questions
In most cases, yes. Australian businesses often expand by establishing a foreign subsidiary or using franchising or licensing arrangements. Each option affects liability, tax and control differently, so choosing the right structure early helps manage risk and supports long-term international growth.
No. Trade mark protection operates on a territorial basis, so Australian registrations do not extend internationally. You must register your trade marks separately in each country you enter. Registering early helps prevent copycats and protects your brand before you begin trading overseas.
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