Things to consider when becoming a Master Franchisee

What should you look for when considering becoming a Master Franchisee? Nick Strong MD of www.selectyourfranchise.com looks at the options. For the purposes of this exercise we will assume that you have not previously been, or worked for, a franchisor.

Franchise consultants such as www.horwathfranchising.co.uk spend about as much time advising UK franchisors how to find partners overseas, and overseas franchisors how to find partners in the UK, as we do working with people acquiring master franchises for the UK, and the things to consider are a mirror image of each other. Both sides should be looking for positive mutual commitment to building a sound business over many years, and this will involve working together with a common-sense approach to financing, training and support.

Unless the Franchisor can show evidence of a policy decision to embark on, and properly resource, an international development programme, supported by a detailed business plan, with input from people who know the game, then neither they, nor the potential master franchisee, should go any further.

Something to look for specifically is what basic market research has been done by the Franchisor on his product or service in the target country. If none, what makes him think a franchised network can succeed there?

Obviously, even if he has done some, you will need to verify it with some of your own when preparing your business plan, as well as considering the potential differences in key ratios such as property costs, wage rates or petrol prices. You also need to build in some franchising research - how does the franchising market for potential franchisees differ in your country to the Franchisor’s home country, and is the proposed fee structure and rate of franchisee roll-out realistic? What about the costs of franchisee recruitment, or local laws and cultural differences that may affect the operation?

Please note, comparing the population of the USA or Australia with the population of your country, and extrapolating figures there from is NOT market research!

You will also want to know about the Franchisor's track record. If he comes from a country that requires pre-contract disclosure for domestic operations then ask for a copy of the relevant Disclosure Document.



Things to consider when becoming a Master Franchisee - To learn more about this author, visit Nick Strong's Website.

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