Franchisors More Susceptible to Misconduct Violations


Franchisors are an example of a type of corporation more susceptible to misconduct risk than others, primarily because of their reliance on international distributors. Franchisors must therefore conduct rigorous internal compliance programs to ensure they are adhering to U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act requirements. Both regulations are international in reach and make it a crime to bribe a foreign official to secure an improper business advantage.  

A recent article posted to underscores the need for franchisors to conduct due diligence on the international distributors they do business with. The article explains how you no organization cans just assume these third parties are following FCPA and Bribery Act requirements.  

The article’s author suggests franchisors take three critical steps when developing a sound approach to ensuring international distributor’s compliance with the FCPA and Bribery Act acts: 

  1. Clearly understand how products are delivered to end-users, including the use of any intermediaries; 
  1. Prohibit use of sub-distributors by distributors unless they are vetted and approved by the franchisor; and 
  1. Enforce distributor participation in a franchisor’s compliance program, including compliance with all FCPA and Bribery Act rules. 

The article also offers nine tips for effective FCPA and Bribery Act compliance that can be utilized by franchisors and all types of organizations. To learn more, consider reading the article