How can I use franchising as a method to grow internationally?
For a great number of corporations the thought of developing into other countries is often a extremely attractive proposition. However, for most it also seems like an insurmountable problem that’s just too complex to look at seriously. But franchising is able to present the remedy. Compared to the big investment required to open up wholly owned subsidiaries in the selected markets, it’s relatively low cost, low risk and importantly it utilizes the local experience of individuals used to carrying out commerce in that region. There are many organizations that don’t franchise in their home market place but have decided to develop internationally by using a franchise model, which includes some large, well known organizations.
The first thing to say is that international franchising must only be attempted with the support of professional, experienced franchise professionals. It really is a complex area and a small investment in specialist guidance at the start will make the entire undertaking easier and more effective.
It is an obvious point to make, but overseas markets tend not to work in the very same way as the business does in your country. Obvious though it is, a lot of businesses have learnt this the difficult way. Local legislation and legal systems will be different, ways of doing business will be different, regional culture will be different and customer behaviour could well be different. In truth all of these aspects are extremely attractive motives to franchise. Having a very good franchisee who is a business person used to operating in the local marketplace is fundamental and will help you enormously.
But who’s this franchisee and what do they do? Well there are lots of solutions to format an international franchise system. Beginning at the bottom you may go for direct franchisees - that is people whose role is to open and run the business units themselves. Or you could choose regional developers whose role it is to take on and manage the franchisees who operate the business units. Then again it is possible to decide to pass over the development of a entire country or region to your master licensee who effectively becomes the franchisor for that territory. They then may either recruit regional developers or franchisees.
All of these methods has its merits and the choice is to do with the kind of business that you are in, the role you want to undertake in the franchising program and the marketplaces you wish to enter. The critical thing is to have high-quality guidance before making the decision, simply because once made it is difficult to undo.
Having completed the analysis and structured the correct strategy for each international territory being targeted the right documentation has to be developed. Each layer of the franchising structure requires guidance on how to function along with a legal framework in which to perform. Again a top class franchise advisor will have the ability to help you with this.
Finally, the job of locating the right individuals to work with begins. Master licensee and franchisee recruitment might take time, but the key thing is to make certain you search for the correct individuals to work with. When making use of the services of good international franchise specialists it is a blend of marketing and networking that achieves the very best results.
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