Frequently Asked Questions

Common Questions about Establishing a U.S. Operation

Sales and Distribution. Under this business strategy, parties manufacture product in their home country and then sell products or services to U.S. customers, through direct sales or through sales agents, distributors, wholesalers, dealers or other intermediaries in the United States. The United States represents an enormous market in which foreign companies can sell products, license software and perform services. Numerous distributors, dealers and other sales intermediaries in the United States can assist foreign companies in setting up marketing and distribution channels here.

Joint Ventures and Teaming Agreements. Under this business strategy, two or more parties collaborate to pursue a specific business purpose. In an "entity joint venture” the parties form a separate corporation or other entity to conduct the business of the venture. In a "non-entity joint venture” the parties contribute capital, personnel or other resources to conduct the business of the venture without the formation of a separate entity. Joint ventures and teaming agreements are a common form of business in the information technology industry for product development and major project management. These are extremely useful strategies for positioning foreign companies to become involved in major projects in the United States where they would otherwise not have access. In addition, U.S. companies frequently look to team with foreign companies in joint ventures to obtain access to business opportunities in Europe.

Franchise and License Agreements. Under a franchise or license arrangement, the franchisor grants the right to a franchisee to engage in a proprietary form of business. A franchise or license arrangement is a desirable way for a foreign company to establish and expand its business throughout the United States in a limited period of time or with a limited capital investment.

Sub-contracting. Under this type of business arrangement, a party performing a contract hires a second party to perform a portion of the contract. Like teaming agreements and joint ventures, this is a proven method for foreign companies to obtain access to major business opportunities to which they would otherwise not have access.

Manufacturing. Under this strategy, the foreign company establishes manufacturing operations directly in the United States. This could range from final assembly of components sourced in the company’s home country or other countries, to full-scale manufacturing operations in the United States. Finished products can be sold throughout the United States and, under NAFTA, can be distributed on a reduced-tariff or tariff-free basis throughout Mexico and Canada

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