Incoterms_® and Commercial Contracts

The following are discussions regarding immigration and visa requirements to enter the United States, the European Union and the UK, Japan, the People’s Republic of China, Russia, Brazil and Mexico. While this is not complete list of all countries where franchising activity may take place, it is representative of some of the larger countries and regions where franchising takes place.

1 ENTERING THE UNITED STATES

Most Canadian citizens and many citizens from Visa Waiver Program (“VWP”) countries can come to the United States for up to 90 days without a visa for business, tourism, visits or pleasure⁶¹. They must present a machine-readable passport at the US port of entry. If travel is for education (for credit), employment, work as foreign press, radio, film, journalist, or other information media, or permanent residence in the US, citizens from other countries will need a visa. A visa does not guarantee entry into the United States. The type of visa needed is defined by immigration law, and relates to the principal purpose of the person’s travel⁶². The Consular Officer at the US embassy or consulate will decide what kind of visa is needed when the person applies.

In most cases, the VWP permits citizens of other countries to enter the United States for sufficient time to participate in training programs and to attend periodic meetings. Where a training program extends for longer than 90 days or other requirements of the VWP are not met, then the foreign citizens will need to obtain a visa.

2 ENTERING THE EUROPEAN UNION AND UNITED KINGDOM

Citizens of the European countries can travel within the EU free of immigration controls and without needing visas. For stays of less than three months the only requirement on the citizens of the EU countries is that they possess a valid identification document. Stays of longer than three months are subject to certain conditions, primarily relating to involvement in an economic activity, whether on an employed or self-employed basis, and having sufficient resources so as not to be a burden on the social services of the host member state.

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European states that have signed the Schengen Agreement⁶³ have opened their borders to persons from outside the EU, which means that once a person has legally entered one of the Schengen countries, that person can then move within the Schengen area without having to obtain separate visas for each individual country. The UK is not a party to the Schengen Agreement. In practice, generally only either those Franchisors who are based outside the EU and who wish to enter the EU franchise market by bringing their own staff or UK Franchisors and franchise networks who want to make use of skilled workers from outside the EU will be affected.

3 ENTERING JAPAN

For a short-term stay in Japan, a foreigner needs only a valid passport and a visa. A short-term stay means a stay up to 90 days that does not entail paid activities. Business negotiations, execution of contracts, and market research without setting up a base in Japan fall into this category. A stay to participate in lectures or meetings also qualifies as a short-term stay⁶⁴. Thus, trainees of foreign Master Franchisees or Sub-Franchisees participating in the training of the Japanese Franchisor can enter Japan only with a passport and visa as long as they are employed and paid by the foreign Master Franchisee or Sub-Franchisee. A visa can be waived for nationals of certain countries⁶⁵. Nationals from other countries must apply for a visa with the local Japanese Embassy or Consulate General⁶⁶.

If the stay will exceed ninety days, a foreigner must acquire the “status of residence” and bring a Certificate of Eligibility before entering Japan. The status of residence is affirmed when the purpose of the stay falls within one of the permitted activities for foreigners. In the context of international franchising, the categories of “specialist with humanities or international services” (such as an interpreter, advertising staff or designer), “skilled labor” (such as a cook of non-Japanese cuisine) or “engineer” (such as an engineer of a computer system) may be of relevance. When the foreign Franchisor owns 20 percent or more of the equity capital of the Japanese Franchisee, or the Japanese Franchisor owns 20 percent or more of the equity capital of the foreign Franchisee, employees of the non-Japanese company can enter Japan as “intra-company transferees.” If the employees of the Master Franchisee are going to stay with the Franchisor’s office in Japan for the purpose of training on location without being employed by the Franchisor, the status of “training” could be applicable. Application for a Certificate of Eligibility must be made with the Immigration Bureau in Japan. Therefore, in practice, the Japanese side (Franchisor or Franchisee in Japan) must make the application on behalf of the foreigner who intends to enter Japan. The procedure could take from a few weeks to a
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few months⁶⁷. After acquiring the Certificate of Eligibility, the foreigner applies for a working visa with the local Japanese Embassy or Consulate General.

4 ENTERING THE PEOPLE’S REPUBLIC OF CHINA

Most foreigners will need a visa to enter the PRC. Among the limited exceptions are visitors from Japan, Brunei and Singapore. While the regulation of foreigners entering the PRC has not been closely regulated in the last 10 years or so, the increasing number of foreigners who wish to live or do business in the PRC has resulted in abuses of the visa process and the authorities are slowly increasing enforcement of the regulations.

As part of the increase in regulations on June 30 2012, the Standing Committee of the National People’s Congress adopted the new PRC Exit-Entry Administration Law (中华人民共和国出境入境管理法), which became effective on July 1, 2013. Essentially this law creates a more modern immigration system.

Business visitors should hold an “F Visa.” This requires obtaining a Visa Notifications Form from an authorized Chinese Unit, an invitation letter from the host company, meeting or exhibition organizers in China, or an introduction letter from the applicant’s foreign company that has business in China. If the application is complete visas are issued relatively quickly and the fees are range from about US$30 to $130. It has become more difficult to obtain multiple entry visas and it is now necessary to submit documents proving that the applicant or the sponsor employer has made an investment in China, or has established a collaboration with a Chinese company (such as the PRC business license for the WFOE, contracts, a letter of appointment, etc.), or proving that the applicant has been issued an “F Visa” at least twice before.

To work in China a foreigner requires both a work permit and a work-based residence permit. Under the new rules work-based residence permits will be valid for a minimum of 90 days and a maximum of five years. Further implementation rules are expected to be enacted.

5 ENTERING THE RUSSIAN FEDERATION

Visitors to the Russian Federation from most other countries in the Commonwealth of Independent States (the former Soviet republics), as well as from South Ossetia and Abkhazia, may enter without visas. Citizens of a number of Latin American countries may also enter for up to 90 days without a visa, provided that they are not entering for commercial reasons.

Other foreigners visiting Russia for commercial purposes will require a “деловая виза” or business visa. Because Russian citizens have been subject to a number of stringent requirements when applying for visas in some other countries, such as Canada and the United States, Russia has reciprocated by making it more difficult for citizens of these countries to obtain visas for Russia. On 9 September 2012 the Russia-US simplified
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visa agreement came into effect to ease some of these problems, and it is hoped that the formal entry of the Russian Federation into the World Trade Organization will further ease these problems. Considerable resistance from the Canadian Immigration Minister to easing the rules for Russians still exists, so a similar change for Canadians is not yet on the horizon.

All foreigners visiting Russia, including tourists, must have a Russia-based sponsor. Russian visas are usually granted only for the specific dates in the invitation letter provided by the sponsor. Most foreigners may remain in the Russian Federation for only 90 days in a 180-day period. Those whose visas permit employment or study are not normally subject to this rule. Russian business visas may be issued for single, double or multiple entries, and for a period of up to one, three or six months. These visas are designed for people visiting to undertake negotiations and visit exhibitions, and depending on the activities planned, may not be suitable for activities that involve assisting an existing franchisee.

Persons planning to actively assist an existing business should consider applying for a work visa (Рабочая виза). These are more difficult to obtain, however, as the following must be provided:

• An original letter of invitation from the Russian Ministry of the Interior provided by the Russian host/employer;
• A letter, on company letterhead, from an employer or sponsoring company, introducing the applicant, indicating the applicant’s employment status or position held in the company and clearly stating the purpose of visit to Russia;
• A copy of a negative HIV-test certificate (taken within the previous 90 days); and
• A letter of intent from the applicant outlining the purpose of travel to Russia, the length of intended stay in Russia, the names of places to be visited, his or her contact information in Russia, and accommodation information or a letter of invitation from the Russian employer/host.

Russian visas are strictly enforced. A valid visa is needed to depart the country as well as to enter. If the visa expires while the individual is in the country a new one must be applied for before the individual will be allowed to depart.

In 2010 the Russian laws were amended to make it easier for highly skilled persons to obtain work visas, and in August 2012 proposed amendments were introduced in the Duma to assist representatives and employees of major foreign companies investing in Russia and visitors to the Russian Federation from most other countries in the Commonwealth of Independent States.

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6 ENTERING BRAZIL AND MEXICO

The Brazilian government grants a temporary visa to a foreign national who intends to travel to Brazil for an educational, cultural or business trip, or if the person is an artist, sportsman, scientist, teacher, trainer, journalist or part of a ministry of a religious order. In that case, a foreign national may stay in the country for 90 days or the length of the relevant contract⁶⁸.

Mexico allows entry to the country on a visitor’s visa for up to 180 days to develop economic activities. In these cases, the foreign national must have a job offer, with an invitation from a qualified institution offering a payment in Mexico⁶⁹.

Business visa regulation is different in every Latin American country. The requirements for business visas are available on the web pages of, for example, the ministries of foreign affairs of Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Panama, Peru and Venezuela.

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