Global Business Development

Everything You Need To Know To Make Your Franchise A Global Success

“96 percent of the world’s consumers and over three-quarters of the world’s purchasing power are outside of the United States”, US SBA Administrator.

“Nearly 90% of the next one billion people to attain middle-class status will be in Asia.” Homi Kharas, Brookings Institution.

“As Globalization has taken hold over the last 20 years, international growth has become a “must” for any company seeking high rates of sustained future growth.” Catherine Monson, CEO, FASTSIGNS and Chair, International Franchise Association.

Running a successful and profitable franchise is a good way to accumulate wealth and become a high net worth businessperson and entrepreneur. However, you will need to be well educated, and maybe even a certified franchise expert, if you want to see your franchise make a lot of money.

A recent survey of Franchisor members of the International Franchise Association indicated more than 80% were either international or planned to go global this decade. Having helped 40+ franchisors take their brand global, here are the questions most people have:

  • Which countries have the highest potential for our specific brand?
  • What is the best international development model for our specific franchise?
  • Will our brand fit into the culture of other countries?
  • Will we have to change our training, support, and marketing programs?
  • Can we eventually make a good return on our international investment?
  • What does it cost to develop our franchise outside our home country?

To answers these questions, let’s answer the why, when, how, where and with whom of taking a franchise international

Why Take Your Franchise International?

  • Add new sources of franchise fees, royalties and product sales
  • Reduce dependence on your home country market
  • Leverage your existing technology, know-how and intellectual property
  • Improved economies of scale through network growth
  • Become a franchise expert

When should you take your franchise international?

  • 10 units or 250 units? The number of units is not the best measure of being ready
  • When your business management technology and Intranet are robust
  • When you have applied for a trademark before seeking a licensee in a country
  • When your training, marketing, and support resources are online
  • when you’ve become familiar to franchising and an expert in the domain
  • But, most of all, when you have a plan to succeed

How – The International Development Options

  • Master Franchise – Franchisor grants exclusive rights for a country to one company or expert, often with the right to sub-franchise 
  • Area or Regional Franchise – Franchisor grants exclusive rights for part of a country. The most common method for food franchises
  • Direct Franchise – Franchisor awards expert or certified franchisees and directly supports their Franchisees in a country
  • Joint Venture License – Franchisor jointly invests, owns, and develops the business in a country with a local company
  • Direct Investment – Franchisor owns and operates all units in a country. 

Where should you take your franchise?

  • Rule of Law and IP Protection – this is needed to protect your brand over time
  • Country Stability – this is needed to be able to start and grow your brand
  • Your consumer market size – who can. And will want to buy at your franchise
  • Culture – adaptation, but not changing the brand
  • Ability to get paid in a timely manner, not all countries allow freedom of payments
  • Potential to Achieve An Acceptable ROI – you will have costs associated with fees

And with whom? Your international licensee should have these attributes:

  • A passion for and understanding of your business
  • Successful company with expert experience in appropriate sectors
  • Good reputation in the country
  • Experienced management to put into the business
  • Access to suitable real estate
  • Marketing oriented company
  • Capital to start and grow your business in their country
  • Preferably a licensed or certified expert themselves

A Proven International Development Strategy

  • Budget conservatively for the first 3-5 years of international developments
  • Be realistic in your initial fee expectations
  • Realize that initial fee revenues have associated expenses over time
  • Be realistic in how many countries you can award and properly support
  • Plan ahead for marketing, training, and support costs

William Edwards, CFE, is CEO of Edwards Global Services (EGS) and a global advisor to CEOs. He has 47 years of expert international experience and has lived in 7 countries. He has been a certified Franchisor, an International Master Franchisee in 5 countries, and has assisted more than 40 franchisors in their global development.  bedwards@edwardsglobal.com  +1-949-224-3896.  For more information on the Certified Franchise Executive program, please go to this link: http://bit.ly/3ulCfpE

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