How to bring your Franchise into United Kingdom, land safely and establish your first 10 locations
Bringing a successful Franchise operation from one country into another has varying degrees of complexities. Taking your brand from its original country into a neighbouring country is often far easier than transporting several thousands of miles. However, every year it does happen and with varying degrees of success. This article is designed to assist those owners of successful National Franchise operations that believe that they can bring their entire Franchise offering into the United Kingdom market.
Before you leave the comfort of your own country you should have some prior knowledge of the market that you are planning to enter. This can either be undertaken by yourselves by visiting the market, competition and Franchise Exhibitions and then creating all of the documentation that you will need in order to be able to meet with serious investors and provide a credible offering.
Alternatively you can engage the services of the most experienced Franchise Development Consultants in the country and get them to come to your head office, tour your operations and see the reality of your business as it operates. The consultants would then ideally meet with some of your most successful Franchisees so that they obtain as many first hand experiences as possible. Then they will need to meet with your entire Management Team and understand their various roles and how the needs of the targeted country are best understood, met and delivered. You will normally have a number of Corporate strengths that should be of interest to the target market.
Likewise, you may have a number of weaknesses so it is critical that all areas of your Franchise operation are thoroughly investigated and then reported on. Then the consultancy team can return to their own country and commence the work programme by carrying out pre-entry research and defining the best way in which your company can enter the UK market. Basically there are 4 ways to consider.
- Establishing a company owned flagship store
- A joint venture with a totally suitable partner
- A Master Franchise offering whereby the Master Franchise investor establishes their own flagship operation and finally
- Direct Franchising.
All of these different concepts have been successfully tried and proven to work with varying degrees of success depending upon the Franchise offering and of course the amount of support that the indigenous Franchisor is offering to their overseas investor. Very soon the Franchise Consultants will be able to identify up to 21 key headings that need to be understood and then values placed against each element so that there is a very clear idea of the total investment requirement. The Master Franchisees can then clearly see and begin to understand their obligations as well as total investment requirements.
It will be the responsibility of the investors to buy into your total Franchise offering and having been granted the rights to trade under your brand, establish the flagships within a reasonable period of time. Before a Master Franchisee undertakes these responsibilities, it is critical that they spend several weeks in your country, understanding, first hand, the exact way in which your business operates. Then, when they are establishing the flagship stores, they are in fact testing every element of your Franchise to see how it works in the UK market. Certain products and services may be very well received and others may well not meet your expectations. However, once a certain level of trading has been achieved, then the Master Franchisee can take on the full responsibility to develop your brand to its full potential.
Normally after a period of 12 months, they are ready to recruit independent Franchise Owners who will then establish and develop locations in their respective territories across the United Kingdom. Within the last 10 years there has been an ever increasing number of extremely high net worth investors that are beginning to look at famous retail brands and are prepared to invest up to £ 1 million to ensure that the flagship operation sends out the correct message not only to their customers but also to future Franchise Owner investors.
Even when markets are experiencing a downturn a strong brand will succeed since there are always people that are immune from the recession. Brands like MacDonalds, Burger King, Subway and Papa John's are totally acceptable brands that originated in the US but are today at home on any UK High Street, likewise Spanish brands Mango and Zara who have not as yet offered Franchise partnerships, help to satisfy the consumer demands. Flagship operations recently established in the UK include Foot Solutions from the US, Merchant Tea and Coffee from Australia who have a magnificent flagship in the centre of St Albans. These are just some of the many Franchises to establish themselves in the UK and successfully transferring all of their knowledge frameworks to investors and management teams.
So, where to you start on your journey to bring your brand successfully into the UK market? Having carried out your pre-entry study you will need a comprehensive management HQ team to understand all of the work, drive and commitment that you will need to master and then transfer to your International partners. In addition to having a strong management team, you will also need to organise your own budget not only for the putting together of your Master Franchise offering, but ensuring that you take your time and spend your money in evaluating the various applicants. Admittedly, you can sensibly utilise the services of Franchise brokers that help you to short list such candidates. Then you need to meet with them and carefully evaluate before awarding your Master Franchise.
Although you may receive a substantial initial payment, this money is not profit. You have a responsibility to deliver both initial and ongoing training to such a level that the Master Franchisee is virtually ensured of success. You need them to bring their flagship operations to a positive cash-flow situation and all of this will take time.
Most Masters like to ensure that all of their flagships are trading successfully and this means profitably before offering the Franchise opportunity to local Franchise Owners. The figures that have been achieved can then be used to indicate the likely return on their investment. It is normally 3 to 5 years before a new Master can have such confidence and be able to refer to the return on their own investment.
Finding suitable Master Franchise Owners is best achieved through a combination of targeted PR and advertising and utilising both print and online in the media that is most likely to produce the best results. Intelligent engagement of consultants who have direct access to Franchise titles and websites is the most cost effective route to follow. They will know where there is already a proven track record of Franchisors coming from your sector and succeeding. You should then be able to work with them to achieve realistic goals on a month by month basis.
Many Franchisors also engage the Franchise consultants to monitor exactly what is happening in the market through the use of monthly meetings with the Master and the retained consultants as well as organising secret shoppers and overall pleasing. In the same way that there are no guarantees in business, whether you are looking at airlines, banking or Franchising. One of the keys to success is keeping your finger on pulse and having a professional reporting service so that you have a very good idea of the reality of what is happening. When it comes to awarding your Master Franchise you should endeavour to find either an individual, group of individuals or an established organisation that has a similar vision understanding and commitment to own and develop your brand to its full potential in their market. Together with your Franchise consultants, you should have developed a very clear idea of your partner profile that you would wish to work with and the ability to clearly demonstrate your solid business experience and track record of success.
Most Master Franchisees considerably underestimate the amount of capital that they will need to have in order to establish and then develop the flagships to their full potential. Again, engaging experienced Franchise consultants and financial advisors will help to better understand the financial commitments required. Looking back over nearly 30 years of experience in the Franchise market, this is probably the number one reason why some Masters have failed to succeed. Certain Franchisors have then left the UK market for a period of 5 to 10 years and then return with a new offering package and this time with much higher financial commitments being asked of the Master Franchisee.
Also remember that very few brands can transfer 100 per cent into market after market. There is a formula that exists that will help you to decide whether or not your Franchise does have a realistic chance of success in any market. This 60:20:20 formula requires that 60 per cent of your business must be 100 per cent related to the target market and that no more than 20 per cent will need to be altered in some way to suit the market requirements. Finally, no more than 20 per cent of the Franchise offering should be irrelevant to the market. Experience Master Franchise operators fully realise that each and every country is different and in certain markets there are considerable differences even within one country. This has recently been proven in such markets as Germany, France and Spain. Understanding these and reacting with your professional advisors is critical to the success of all parties concerned.
Once you have a confirmation of the Master Franchise package to offer, financial projections need to be worked out for both yourselves as the Franchisor and your future Master Franchisee partners. Should they not be planning to sub-Franchise, then they are likely to obtain much more profit from all of their company owned Franchise outlets. However, should they be planning to offer sub-Franchises, then there will need to be added with profits to be shared between those investors, the Master Franchisee and of course yourselves as the originating Franchisor.
Also ensure that time is taken to engage professional and experienced Franchise lawyers so that they can ensure that your Intellectual Property Rights, operating manuals and even the marketing materials all dovetail neatly together. With the recruitment of Master Franchise partners you should always engage consultants that have existing qualified databases of known investors and in particular those companies that have already acquired and developed Franchise Rights in your sector.
You are unlikely to find ideal candidates to own and operate our Franchise at Franchise exhibitions since these are designed for individuals seeking Single Unit Franchises rather than high net worth investors and organisations looking for what's new. Once you have established your Master Franchise, then engage the same consultants to work with them to develop your Franchise to its full potential and in accordance with the original business plan. On average, there are about 20 Masters awarded into the United Kingdom each year and the demand for such opportunities grows year to year.
For further information on the best advice and guidance that is available to help companies successfully enter the United Kingdom contact Professor Roy Seaman, CFE, +441 603 620 301 or email firstname.lastname@example.org.