Expanding your business into Europe
A key aspect of Northridge TRACK has been supporting leading sports tech businesses expanding into the UK and Europe. In this article, we summarise the key points to consider and plan for.
Supporting sports tech businesses expanding into the UK and Europe
Through Northridge TRACK, we've supported a number of businesses looking to set up or expand their offering into the UK and Europe.
Our work in this area has recently included supporting FEVO (the US social commerce innovator) with localising its customer contracts, and supporting its European data protection compliance programme.
We've also been supporting GetMetrix (the football skills app originating from Australia) on its corporate structuring and fundraising aspects of its move into the European market. To find out more about GetMetrix, check out the Member News link on the right.
George Willis - Managing Associate
"Alongside our legal advice, we have been able to broker mutually beneficial connections between our overseas TRACK clients and our domestic industry contacts, which has proved a key strength of the TRACK programme and of particular use to businesses moving into the Europe and UK markets."
Corporate structure
There are a number of options for setting up in the UK in particular. Some of the key considerations in choosing a structure centre around what the strategy is for the expansion, as well as accounting and tax considerations:
- Is the strategy just about 'testing the water' (e.g. with an initial customer contract) or is the intention to set up a more permanent operation?
- Will you be targeting UK investors?
Options
If a more permanent base in the UK is planned, the choice of corporate structure is often between (i) a branch office (the legal entity remains the non-UK corporation) or (ii) the incorporation of a new UK-based subsidiary.
There are other routes available, including setting up a joint venture or opting for an agency/distributor model, but such options will naturally increase complexity as they involve a third party partner.
Another advantage of being permanently established in the UK is the ability to take advantage of tax reliefs under investment schemes aimed at supporting investment in growth businesses.
Investors
If you wish to attract local (i.e. UK) investors for the local business only, then a separate local company will be required as the investment vehicle. Alternatively, if all investment should go into the existing non-UK corporation and investors receive a share of the global business, then a local company may not be required.
Whether existing investors should have an entitlement to new UK/european business also affects the choice of structure and ownership model.
"The Northridge TRACK programme, through its legal and commercial advisory support, assisted us to transition the company to the UK, attract a £2M+ in seed investment and secure industry-leading partnerships."
Andrew Hall - Founder & CEO, GetMetrix
Customer contracts
It may be tempting to assume that you can re-use your own supplier template contracts from other jurisdictions when dealing with customers in Europe and the UK, but there are legal and commercial reasons for updating your contracts and templates.
Many customers, especially rightsholders such as clubs, will expect the following from supplier contracts:
- Make sure it’s “anglicised”.
- Aim for reasonable / market-standard positions and consistency across customer relationships.
- User friendly: commercial terms up-front, with detailed legal provisions in a schedule.
Alan Clarke - Co-founder and CEO, STATSports
"The greatest compliment I can pay the team at Northridge is that they aren’t like other lawyers. They understand our business and industry. They don’t tell me the law, they tell me what to do."
Data protection
A GDPR and/or UK GDPR implementation programme will come in various shapes and sizes, but if you are moving into the European market, you will need to consider:
- Updating your customer privacy notices.
- Ensuring your client contracts contain appropriate data protection provisions. There are mandatory data processing provisions to include where you are processing personal data on behalf of your client.
- Consider your international data transfers. This is hot topic at present, with new contractual safeguards having recently been released by the European Commission, with the UK due to follow suit shortly. If you are hosting or otherwise continuing to process personal data outside the region, you will need to implement appropriate safeguards to protect the personal data in question.
- If you are not setting up a local presence, you may be required to appoint a “representative” in the UK and/or the European Economic Area.
- Supplementing internal policies, procedures and governance to ensure you are able to comply with key features of European data protection law, such as facilitating the rights of data subjects, data security and data breach reporting, and maintaining records of data processing.
"Securing employees and workers on written terms and conditions is a key part of protecting the business's value and connections when expanding into Europe and the UK."
Jamie Feldman - Managing Associate
Employment
More often than not, expansion into the European market will require resources “on the ground”.
In that respect, consideration should be given to:
- Having written terms in place with each person that will be involved in the newly expanded business.
- The employment “status” of those individuals, in particular, the associated tax, insurance and employment law consequences from taking on employees.
- Protecting confidential information, intellectual property, customer connections and trade secrets through the use of confidentiality agreements, and/or express terms such as restrictive covenants in employment contracts.
