Advisory Mar, 25 2011

Franchise Gateway to Global Success

If you are exploring new horizons for expanding your well established franchise business, then overseas markets can be a good option for growth. Read on to know the various ways to expand internationally...

By Ramanjit Kaur
Feature Writer
Franchise Gateway to Global Success

Having your business established and expanded on nationwide scale, taking the business to overseas can prove to be highly profitable. Franchising has emerged as an excellent way for business expansion on foreign land as it provides an almost cost-free expansion given that the franchisor receives franchise fee and royalties from the franchisee. Knowing the market where you as a franchisor is planning to expand you can lay down a strong foundation as a franchisor or as a trade mark owner lays down the foundation for the making of a successful franchise. As Tony White, Director, The White Connection and Regional Manager, Gloria Jean’s Coffees, Australia says, “The best time to take the business abroad is only when the franchisor feels that he has reached the saturation point or close to the saturation point in his/her own market.”  This article will be a maneuver for those franchisors who aspire to venture overseas.

Zero-in on a Particular Country

When planning to take the flight of franchising abroad, it is always recommended to zero in on a particular country, or a set of countries you are eyeing to enter into. Acquire the knowledge of the local market, consumer behaviour patterns, and the various rules, regulations and laws applicable in the country and accordingly include the various details in your franchise agreements. Besides this, there are certain other factors too that must be taken into account while venturing overseas, which are: 

  • Initial investment in developing the franchise concept 
  • Franchise training and support
  • Language bars
  • Logistics and product costs
  • Competition from local players
  • Selection of suitable franchisees

Selection of Franchisees

Out of these, selection of suitable franchisees is of utmost importance and is a difficult task too when franchising overseas. Thus, it is recommended by the franchise experts to take the help of the brokers who are specialised in international franchise development. Their know-how of the market along with their established network can help you promote your franchise business effectively and efficiently. Besides this, here are certain other ways also that a franchisor can opt for identifying and searching the opposite market to mark your presence: 

  • Advertising
  • Searching online
  • Franchise and trade shows 
  • PR agencies and
  • Direct mails

Ways to Franchise

Once you are done with all the pre-requisites of expanding overseas, next step is to get familiar with the various ways to franchise your business. These are:

  • Unit franchise: It is the simplest way of franchising under which a franchisee is given with the various proprietary and intellectual property rights to run one franchise outlet.
  • Joint Ventures: It is an advantageous mode of expansion for the franchisor that allows him to participate in the equity admiration of the foreign entity while providing it with an ongoing revenue stream, generally based on gross sales.
  • Master franchise/ Area franchise: Under this setting, a franchisee is entitled with a particular geographical area, state or country to operate the franchise business. The franchisee also has the rights to sub franchise the business further within the same area, state or country.

In addition to all this, he laws and local regulations in the targeted country must be considered cautiously as they have a direct impact on the franchisor and the success of the franchise business. In countries like Indonesia, a franchisor needs to register his franchise business under a relevant authority before getting started with the franchise operations whereas in USA, UK, stringent disclosure documents are to be complied by the franchisors. In other words, franchisors must be aware of the franchise laws of the particular country he is planning to expand into and must abide the legalities that are followed there.

So, get ready to spread your wings across the globe and cover it under your brand umbrella.

Related: Turn towards turn key businesses

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