Exchange Rates

For those franchising companies, which do business internationally, they must consider currency exchange rates in the countries in which they do business. Otherwise large fluctuations in currency devaluations can cause huge problems in the franchisor’s cash flow.

It is for this reason that I had decided to add a clause into 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 of America (“U.S. Dollars”). All payments due to Franchisor under this Agreement shall be made in U.S. Dollars. Any fees or payments may be calculated and determined in the currency in which the receipts are denominated. However, payment of all such fees shall be made in U.S. Dollars based on the “Exchange Rate” in effect as of the last day of the date on which such fees or payments are due. As used herein, “Exchange Rate” shall mean the rate of exchange of the currency in which Gross Receipts of the Location are denominated and U.S. Dollars, as published in the United States edition of The Wall Street Journal on the next business day following the last day of the calendar month for which a fee or payment is due.

In the event a payment is transmitted after the date payment is due, the currency exchange rate used shall be the Exchange Rate as of the date payment was due or the Exchange Rate as of the date the payment is transmitted, whichever rate produces the larger amount in U.S. Dollars, and regardless of any Late Payment (as defined in Section 2.5 above) or of any other remedy for non-payment or untimely payment of sums due pursuant to this Agreement. Franchisee shall be responsible for obtaining and maintaining any and all necessary or appropriate governmental approvals or permits enabling Franchisee to make payments to Franchisor in U.S. Dollars.

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Believe it or not, some international franchise agreements do not have such a clause in them and for those franchising companies it might be too late to add such a clause after the fact. It is for this reason that I recommend any company considering franchising internationally to go see an international franchising attorney who has dealt with such things. I hope you will consider this in 2006.

By: Lance Winslow

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If you’re traveling, you need to take a moment to make sure that you’re getting an excellent deal on your tourist rates of exchange. When you’re clear on the other side of the world, you really do not want to be stuck somewhere without enough money to get what you need while you’re there. If you’re not careful with your money exchange, you may wind up losing a bit of money in the long run and having far less to spend when you get where you’re going. You need to make sure that the deal you’re getting on your exchange is one of the best available because you really don’t want to wind up with less money than you need when you get where you’re going. Here’s what to keep in mind in order to make sure that you’re getting a good exchange rate.

-Do Your Homework-

You should know the actual exchange rate before spending a single dollar switching your currency over. Look online at one of those financial news websites. They usually have charts to tell you how Yen stack up to dollars and dollars to pounds, so you can check any currency in the entire world against your own to make sure that the prices you’re paying at the exchange companies are fair prices. Simply put: Know what the actual world average is in terms of exchange rates so as to make one hundred percent certain that you can’t get ripped off, since you’ll know exactly what you SHOULD be paying.

-Shop Around-

Everyone has different rates so you’ll want to look everywhere and make sure you’re getting the best deal. It’s a highly competitive market, so by shopping around you can find the best deals. Look for trustworthiness, low rates and so on, and try to make sure that you’re getting the absolute best exchange rate around, period.

-Shop Online-

This one kind of goes without saying, doesn’t it? You want to look at all the competition, and the only way to do that is to shop online, isn’t it? With the internet, the entire world of the market is open to you, whereas in person you’re restricted to just the places in your area. Shopping online can almost always guarantee you a better deal. This is just sort of a rule when it comes to the Twenty First Century. The internet just plain makes everything easier, from shopping around for great exchange rates to shopping online for rare items. The web opens the whole industry up to you and allows you to take your pick of everything available. So if you want a good rate, just use the internet and you’re already half way there and can ensure that your trip overseas goes off without a hitch.

By: Tom Fisher

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Holidays are supposed to be a time to unwind and forget about financial woes. Yet burying your head in the sand when it comes to exchange rates can be a very costly error indeed. It is unwise to neglect checking how your currency is faring against that of the country where you are visiting. The changing nature of exchange rates means that bringing a currency converter with you could be a really clever move that saves you money.

When you’re going on holiday, all you really want to do is ignore the stresses of modern life and think about nothing else but the idyllic location where you are going. The last thing to enter traveler’s minds is the exchange rates of foreign currencies yet this action could cost you much needed holiday money. As anyone who has ever been overseas before will testify, currency exchange rates change constantly and the amount of foreign currency you will receive for your regular money will alter day by day. This means that you need to keep an eye out for changing rates to get the most from your exchange.

Eagle-eyed economists among you will notice that exchange rates for one particular currency over another will almost always be favorable at a certain time of year. This is used to promote tourism and explains why you will see an influx of a certain nationality in your country at a particular period. For example, at one stage, the dollar may be weak against the yen which will encourage Japanese tourists to have their holiday at that time. Likewise, the dollar may be strong against the Euro which will see a plethora of American tourists hitting locations all over Europe.

When you go abroad, avoid having to do mathematics in your head regarding exchange rates. It may be worth your while to invest in a currency converter which is a handy device for any tourist. Before you leave be sure to know what the current exchange rates for the two currencies involved in your trip are. This is because that rate could change significantly before you get home. There are numerous beautiful locations to visit in the world so if you’re on a tight budget it may be worth considering a location that offers you good value for your home currency.

You also have to take into account the cost of living in the country you are visiting. The ‘nominal rate’ of a currency is the amount of foreign currency you will receive when exchanging. Yet this figure is not always that important because the ‘real rate’ is something completely different. This describes the value of your currency in terms of what you can actually buy in your foreign destination. You will find that a trip to Vietnam would cost you much less than a trip to Australia in terms of how much goods actually cost over there.

Keeping a close watch on exchange rates is something that will benefit you financially and could even save you enough money to put towards another holiday at a later date. Even if you are only considering a quick trip from England to Ireland you will have to carefully note how the sterling is doing against the Euro.

By: Maureen Holland

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