Opportunities and Challenges in International Franchising - Foreign Franchises Trying to Move into the U.S.

Guest post by: Mary Tomzack
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Why You Lost Yet Another Franchisee Prospect to Your Competitor - By Mary Tomzack

Although franchising is growing more rapidly outside the U.S. than in our more saturated U.S. market, the U.S. remains an extremely attractive - and prestigious - market in the eyes of many foreign franchisors. Thus, one trend that is seeing renewed interest is the influx of foreign franchise systems into the U.S..

However, while moving from the U.S. to a foreign market can be a challenge for American businesses, it can be even more challenging for foreign operations to establish a foothold here in the States, as they deal with our more complex regulations, a serious language barrier, and the ever-competitive U.S. market.

What makes it so difficult for foreign franchisors to move operations into the U.S? There are a number of factors, including the following:

-The move into the U.S. entails learning to conform to American franchise laws, which are some of the most stringent in the world.
-The corporate parent of the franchisor needs to locate an office to set up shop, hire U.S. employees, and establish one or more company units (and that's just to get started).
-Foreign franchisors must learn to navigate the FTC, state franchise registration authorities, and local zoning regulations and real estate laws, among the many regulatory hurdles they may not face at home.
-Foreign franchisors must adjust the very structure of their franchise program, as prospective franchisees in the U.S. have come to expect extremely detailed operating manuals, extensive training, ongoing support, and lightning-fast growth.
-Foreign franchisors must face not only the daunting task of marketing and selling the franchise, but must give prospective franchisees the confidence that a foreign-owned entity will be able to generate culturally appropriate, highly impactful national advertising programs to drive success in the U.S..

In a nutshell, a foreign franchisor must accomplish everything that a new U.S. franchisor has to do to operate legitimately but within a totally new and somewhat strange environment and often with a different language. Just think how frustrated and helpless you feel when you're in a foreign country, for business or pleasure, and you can't find medical help, the street of your hotel, or a place to access the Internet. Even the most mundane tasks can grow unnecessarily complicated. Magnify this a hundred times to get a sense for how foreign franchisors often feel when first dipping their toes in the U.S. market.

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Why You Lost Yet Another Franchisee Prospect to Your Competitor - By Mary Tomzack

About the Author: Mary Tomzack

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MARY E. TOMZACK is the founder of FranchiseHelp.com - the world's largest directory of franchise business opportunities. She is a noted franchise expert and the author of Tips & Traps When Buying a Franchise, one of the industry's first and most respected guides to finding, evaluating, and financing a franchise investment. Ms. Tomzack is often interviewed for franchise articles in publications such as The New York Times, "Franchise World" and "Entrepreneur Magazine" and was recently featured at a Harvard Business School panel on franchising for MBAs. Read FranchiseHelp's latest franchise information at the FH blog or reach Mary at company@franchisehelp.com or at 888-491-FRAN (3726).
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