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A Guide to Franchising Abroad

Guest post by: Sean McGarry

Article Overview: Since there are a variety of cultures, customs, and societies around the world, it can be difficult to grow your brand internationally. Nevertheless, a plethora of franchises – such as SUBWAY, Papa John’s and The Zoo Health Club -- have made the transition and effectively developed abroad. While larger companies have more success because of their brand awareness worldwide, smaller companies can also thrive internationally with an innovative concept and strategic plan.

A Guide to Franchising Abroad

Since there are a variety of cultures, customs, and societies around the world, it can be difficult to grow your brand internationally. Nevertheless, a plethora of franchises – such as SUBWAY, Papa John’s and The Zoo Health Club -- have made the transition and effectively developed abroad. While larger companies have more success because of their brand awareness worldwide, smaller companies can also thrive internationally with an innovative concept and strategic plan.

The U.K. franchise market is one of the most appealing to U.S. franchisors because of the common language. It is also the most active and developed in Europe. According to a NatWest/British Franchise Association survey conducted in 2009, the British franchise industry accounts for £11.4 ($17.1) billion annually (in comparison with £1 ($1.5) billion in 1984). There are 838 franchisors actively operating in the U.K. with an estimated 34,600 franchisees.

U.S. food franchises, in particular, transfer well into the U.K. and Irish markets. With a reasonable amount of shared language and cultural traditions, some U.S. brands are already recognizable in this country. U.S. franchises currently operating in the U.K. and Irish markets include The Zoo Health Club, SUBWAY, McDonald’s, Orkin Pest Control, Burger King, Mr. Pretzel’s, Juice Zone, AIS Media and Alloy Wheel Repair Specialists among many others. Yet, before successfully entering any foreign market, one must first carry out a significant amount of research on the economy, market and society.

Smaller chains can benefit from franchising abroad but first they must build a strong brand on a national level. In compiling its Top 100 Global Franchises – an objective, quantifiable measurement of franchise expansion worldwide -- Franchise Direct found that top franchises share a number of characteristics that contributed to their success:Strong and internationally recognized brands, a well-defined business model, comprehensive training and ongoing support, adaptability and innovation. A successful global concept is one that adapts to local tastes and cultures. If there is a surplus of vegetarians or health-conscious consumers in the region, menus should be tailored accordingly. Food operators in India, for example, have adopted local spices, flavors and meat alternatives. Pizza Hut says that one of its more popular offerings in India is masala — a savory blend of cardamom, coriander and mace (which is a kind of nutmeg). Additionally, franchisors should stay up-to-date with cultural pastimes and events.

Consumers worldwide are drawn to green initiatives. McDonald’s, which ranked No.1 in Franchise Direct’s Top 100, has jumped on the eco-friendly bandwagon. In an effort to reduce their carbon footprint, McDonald’s headquarters provides all of their franchises with guidance and support to improve energy efficiency and sustainability. They also strive to protect the health and productivity of their suppliers’ fisheries. The company is working with fish suppliers and Conservation International to develop a set of sustainable fisheries’ guidelines.

One of the first steps a franchise will have to take when looking to franchise internationally is obtaining worldwide protection of its intellectual property. Some franchisors have encountered difficulties due to a local company in a foreign market using their trade name for some time prior to their arrival in the market. And these problems are only compounded if it’s in the same product or service area. Another significant challenge is the adaption and translation of all company materials, documentation and manuals to the local language.

One of the options when expanding internationally is to look for a master franchisee in the country in which you plan to enter. The master franchisee is someone that purchases the rights to sub-franchise and is responsible for building the franchisor’s brand in a specific country or territory. The master franchisee should have familiarity with the local market, experience in the relevant industry (ideal, but not always essential), proven financial resources and proven management skills.

Since overhead costs associated with franchising a business are so high, one needs a significant number of franchisees to pay royalties in order to cover the overhead structure. A company should also assess its ability to source outside capital. Venture capitalists are interested in investing in franchise companies because of the possibility of significant growth and return on investment. The investment can be used to strengthen your management team and also buy outside expertise. Examples include franchise consultants to help with detailed documentation, branding, legal expertise, registration of trademarks and protection of intellectual property. The global reach of the internet enables franchisors to promote internationally and by using this medium, U.S. franchisors will expand globally in the years to come.

Although integrating a brand across the globe can be a complex process, it can be achieved with the appropriate amount of research and dedication. If feeling overwhelmed, obtain a qualified franchising consultant to point you in the right direction.

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Article Tags: brand awareness, cultures, customs, food franchises, franchises, global, health club, international, larger companies, papa johns, pizza, plethora, smaller companies, strategic plan, subway, transition, zoo



Related Forum Posts
Re: Re Franchise etc - [quote="bmueller47":e0j0nu4t]Can you see a shift of various types of franchises? What I am thinking about is that today it is more difficult to create franchises, that has great appeal. More and more people want to have their business, but no interference of someone else.[/quote:e0j0nu4t] Not sure what you mean exactly but it is certain that more and more people want to have their own business but not more and more people know what they really want to do, or how to do it. And that's what franchising is all about. Franchising is not for an entrepreneur. An entrepreneur will do his own thing. People who buy franchises want a turn key business, with a proven model. Franchising in the US had never been that good. I don't have the exact numbers in mind but I know for sure that franchising is growing more and more as people are getting more and more aware of this business model.
Franchising vs. Licensing? - What is your opinion on Franchising vs. Licensing? Which is better?
Nominations for a new Franchising Moderator! - Is there anyone you'd like to nominate as our Franchising Moderator (or volunteers for the position)?
Great Article, chock full of info. - Ian, Thank you for linking your article regarding Licensing vs Franchising. Its a good read.
Need a book recommendation for writing better - I'm always looking for ways to improve my writing skills, so I was just wondering if anyone could recommend a good copywriting or copyediting book? I was actually thinking of reading "The Copywriter's Handbook : A Step-by-Step Guide to Writing Copy That Sells" by Robert W Bly [u:w3cg00nn]OR[/u:w3cg00nn] "The Copyeditor's Handbook: A Guide for Book Publishing and Corporate Communications" by Amy Einsohn. Would anyone know if these books are any good? Thanks


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