How To Franchise Your Business Internationally
International franchising can appear daunting, however, when you franchise with The Franchise Company, you’ll get to work with some of the UK’s most experienced franchise consultants, with an in-depth understanding of the various development options that are available to you.
Initial Viability Check
At The Franchise Company, our team of expert consultants will help to determine the viability of your business as an international franchise before anything else. Throughout the international franchising process, however long it is for you, you’ll have one franchise consultant who truly understands your business, sector, goals and the unique challenges your business may face during the franchising process. Your consultant will start the process by visiting you at your location or head office to carry out an initial review of your business and understand how it currently operates.
During the visit, your consultant will take an in-depth look at the key performance elements of your business model that could impact your decision to franchise - primarily your finances, day to day operations, marketing and management structure. One of the most important points to consider when moving to international franchising is that you have the funds available to cover the project investment and other costs. However, during the early stages of analysis, we simply want to see if it is reasonable for your business to move into an international franchise, and if so, what form this will take. However, not every business is suitable for international franchising, for a variety of reasons, and in that case, your consultant will work closely with you to find other options for further development and expansion.
Designing Your International Franchise Model
If, after the initial visit, your consultant believes that franchising is viable for your business we can move to create a bespoke franchise model based around your business goals and current operation. There are options available when it comes to creating the most suitable model for an international franchised opportunity. We’ll consider all the important elements of your business and culture in order to create a model that makes sense for you.
We’ll spend time assessing and understanding your business model so that any key elements are checked against the laws and customs of the countries considered suitable for your franchise model.
International Franchise Model Options
There are a few options for international franchises. The most usual of these is Master Franchising, though Regional Franchising can be effective as well as an Area Development.
Master franchising is generally one of the most popular arrangements to expand a franchise internationally and as the term implies the master franchisee undertakes responsibility for the development of the brand in their Country and the ongoing support needed for franchisees. The master franchisee is also responsible for ensuring the franchise model meets all national laws and applicable regulations.
Regional franchising is similar to master franchising with the regional franchisee usually being responsible for a region rather than an entire country.
Area Development is most commonly used in markets where sub-franchising isn’t allowed for whatever reason. In Area Development systems, a development agreement is made between the franchisor and a person or party who will take on the role of franchisor in the new area and often there is a performance clause attached covering the number of new franchisees that should be recruited over say a 5 or 10 year period.
Direct Franchise development is where the franchisor retains complete control over franchise recruitment and development within a new country. That system requires a lot of resources and time on the part of the franchisor, though also allows them to maintain control directly over the new territory in the early stages. A master franchisee can then be recruited once the new franchise business is established.
Once we have identified the most suitable franchise model for you, we can start to prepare the franchise documentation that fits your franchise model, and will help to ensure long-term success for you and your franchisees in the new territory.
All franchises need to have high-quality, accurate and comprehensive documentation to run effectively, and international franchises are no exception. In fact, it is especially important for international franchises, as there is a large amount of decentralised control in many international franchise models.
The documentation for international franchises includes:
- Creating recruitment, marketing and branding materials for new franchisees in the area.
- Creation of a development schedule to set out expansion goals and recruitment process for the master franchisee and/or regional franchisees if required.
- Documents setting out support structures, reporting protocols and control processes across the networks.
- Legally sound franchise agreements that cover franchisors and franchisees across new territories.
- The financial models for the international expansion, including initial start-up costs for franchisors and franchisees, as well as ongoing franchise fee structures.
- The setting out of the day-to-day operations of the franchise.
- Training and development programmes that suit the culture and climate of the market in the new territory.
While these documents have to be legally airtight, it is important to leave space for flexibility and changes in the operations and process of the new territory, as issues can come up at any stage of the creation, piloting and expansion process, and organisations have to be able to respond to them quickly and effectively.
Piloting, Recruitment and Expansion
For international franchisors, recruitment is a particularly important stage, as master and regional franchisees have to be chosen carefully, due to the increased responsibility they have compared to regular domestic franchisees. During the pilot period of the franchise, we’ll offer you and your franchisees support and guidance to help ensure success in the early days of the franchise.
Once your business starts to move out of the initial pilot period, we’ll continue to support you and your franchise network to ensure you continue to see success over time, and when you reach your targets your network doesn’t stagnate, but continues evolving and growing throughout the lifetime of the organisation.
To find out more about the process of franchising a business internationally, contact The Franchise Company today and see how we can help your organisation take the next step into international expansion.