How to bring your franchise into new international markets

There are a number of different challenges in bringing a successful franchise operation from one country into another. Taking a brand from its original country into a neighbouring one is often far easier than transporting it several thousands of miles. However, every year it does happen and with varying degrees of success. This article is designed to assist franchisors who believe they can bring their franchise into the UK market.

It is essential that you have some prior knowledge of the country you are planning to enter before leaving your own country. The research you will need to conduct could possibly be undertaken by yourself, which will involve visiting the market, competition, and franchise exhibitions and then creating all the documentation needed in order to be able to meet with serious investors and provide a credible offering.

Alternatively, you can engage the services of experienced franchise consultants based in the country you are targeting, which in this case is the UK. The UK-based consultant will come to your head office, tour your operations and see the reality of your business as it operates. As well as this a consultant would ideally meet with some of your most successful franchise owners, meet the key members of the management team and understand their various roles. Normally a company will have a number of strengths and weaknesses in terms of entering into a foreign market so it is critical that all areas of your franchise operations are thoroughly investigated.

After visiting your head office, the consultancy team will return to the UK to carry out pre-entry research and will define the best way in which your company can enter the UK market. Basically, there are four options to consider:

  1. Establish a company owned flagship store
  2. A joint venture with a completely suitable partner
  3. A Master Franchise offering whereby the Master Franchise investor establishes their own flagship operation and may then develop corporately or by offering sub franchises
  4. Direct franchising

Having carried out your pre-entry study you will need to establish a head office team who understand the work, drive and commitment involved in transferring a franchise model to international partners. In addition to having a strong management team you will also need to organise your own budget. In preparing your budget within which you will not only need to take into account the putting together of your Master Franchise offering, but also the time and money that will be needed for evaluating various applicants. If, however, you decided to utilise the services of a franchise broker they will help you to short-list candidates. Then you need to meet with them and carefully evaluate each one before awarding your Master Franchise.

Finding suitable Master Franchisees is best achieved through a combination of targeted PR and advertising, utilising both print and online media outlets. Recruiting a consultant who has direct access to print franchise titles, websites and a contact list of potential candidates is one of the most cost effective routes to follow. The consultant will know what has previously worked for franchisors coming from your sector into the UK market.

Although you may receive a substantial initial payment, this money is not profit. You have a responsibility to deliver both initial and ongoing training and support to such a level that the Master Franchisee is virtually ensured of success. You will need to assist them in bringing their flagship operations to a positive cash-flow situation, as most Master Franchisees like to ensure this before offering the franchise opportunity to local single unit franchise owners.

It is common for a Master Franchisee to considerably underestimate the amount of capital needed in order to establish and develop a flagship store operation to its full potential. Looking back over nearly 30 years of experience in the franchise market, I have noticed that this is probably the number one reason why some Master Franchisees have failed to succeed. This is avoidable through the recruitment of a franchise consultant, as they will help you to better understand the financial commitments required.

This article has gone through the basic process of bringing a successful franchise into the UK market. In addition to what has been mentioned here there are several other factors that have to be taken into consideration, for example creating an ongoing marketing strategy to ensure that your franchise continues to grow in the UK. Furthermore, it will be necessary to employ a franchise lawyer to ensure that your intellectual property rights and operating manuals are all correct for the territory you are entering.

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 enquiries@fdsltd.com.