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Jan, 01 2008

Franchise system in globalisation process

Globalisation of franchising is an easier option than setting up subsidiary or joint venture on the foreign soil. With a business insight and adaptability to the foreign rules, it can be developed into an effective tool

Globalisation is the global integration of people, nations and businesses, and increasingly intense. Countries more open to globalisation are taking more advantages of the opportunities.

Franchising is one of the most important mechanisms for expanding business internationally. It is much easier and faster to implement a franchise than a subsidiary or a joint venture. You have the franchisee`s knowledge of your own country and the capacity to make the necessary adaptations in the concept.

Franchise to beat competition

If on the one hand international franchises are an opportunity for some, it may be a nightmare to internal competition. Local enterprises have to update their business faster than the international competition, so that not to be destroyed by it. In reality, the franchise system is a tool to bring more creativity and productivity for the entire country.

For investors who bring franchises for his own country, it is one way to save time and reduce risk with famous brands or with different businesses from those in his country.

There is also the opportunity for local franchisors to lead his country franchises to other countries, leading brands and businesses there. And today, it is not very important where the franchisor is based on. One example is the franchise `Pollo Campero` from Guatemala, which is one of the largest fast food franchises of the world today.

Globalisation is a threat to the week persons and an opportunity for the strong, the real entrepreneurs. The same happens with countries.

Distribution channel

Countries like India, Brazil, Korea, China and other have several successful franchises, franchises with more than 2.000 units, and many of them already located in several countries. It is important for countries not only to export products, but more important, to export brands, to export systems and receive royalties for this. Even those who are exporting products, if they do so through a franchise chain, they will have an exclusive distribution channel for selling their products in the long run, and will not have the surprise of attracting buyers from another more competitive country.

With exclusive distribution channels, like franchising, the franchisor will receive not only for the sale of goods or equipments, but also royalties for his brand and system for many years, sometimes for generations.

With the franchise system, several companies will have an exclusive distribution channel and will export a concept, and not just a product that could make them vulnerable.

The global economy is growing and becoming more open to new business initiatives. There is money in abundance, but badly missing special brands and businesses to invest in.

Companies that can be strengthened internally may combat the foreign competition, and they can do even better if they can expand their own business to other countries to gain recognition and experience. With this strength, they become powerful companies in their local market.

What matters nowadays is not the product that you have, but the brand strength and the distribution channel control.

The franchise is the system that allows small businesses to make this important international movement. And they can make this move quickly. Today, a company does not expect to grow to leave the country, and soon start seeking for investors to expand in markets where it has greater opportunities. And most important, the company uses the expertise and money from investors from the countries where they are going to be expanding.

The Americans are pioneers in the franchise system development and, also, how to export franchises worldwide. Today, the American Government guarantees part of the loans to foreign investors that are buying American franchises through `Eximbank-US` loans.

The franchises that are looking to grow internationally should always seek the support of specialized consulting firms to determine where are the most interesting markets, the expansion paths, the values involved in the operation, how to search for good franchise leads, and how to adapt and implement the concept in each country.

Go internationally on their own is an inappropriate and unnecessary risk. If you have a special concept or a strong brand, WAKE-UP!

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