Franchisors Going International Need to be Prepared

by Ed Teixeira

Franchisors considering opportunities in foreign markets need to have a successful franchise program and the resources, operational systems, staffing and strategy in place before executing their decision. However, there are other steps, that are often overlooked, that need to be taken before going international.

More and more franchisors are recognizing the opportunities that international markets can provide to the growth of their franchise system. Asia, Central and South America and the Middle East receive increased attention.  More specifically, Brazil and India are considered countries with unlimited opportunities for the right franchise concepts. For countries interested in international expansion there are qualifications that need to be considered. I presented some of them in a recent article entitled Going International. In addition, there are other steps that need to be considered.

• Make sure that someone in the franchisor’s organization is assigned the responsibility to receive and review leads for international prospects. On a number of occasions I’ve contacted franchisors to discuss an international candidate when the person receiving my call had no idea who to refer me to.
• Be sure the franchisor staff is familiar with the new international program including which countries or regions are targeted. This makes the initial process more productive for everyone.
• Be careful regarding exclusive broker or consulting arrangements except in unique situations. It’s virtually impossible for a single broker group to have access to all of the qualified candidates from a particular country. Since, brokers that identify prospects from other countries will normally charge a success fee it’s a good idea to engage more than one broker group.
•  Establish a plan for licensing in specific countries but be flexible. As an example, granting a license for all of China or India usually doesn’t make sense given their enormous populations. However, there could be a situation where a licensee might have the financial, logistical and organizational resources to execute an aggressive and successful development strategy. If this situation arises, consider a different approach rather than risk losing a highly qualified prospect.
• Be willing to adapt the franchise presentation in order to meet the characteristics of a particular country. For example in the food sector, changes may include adaptations to a building design and décor or adding or deleting menu items.

These items can be the topping on an effective international expansion strategy. Conversely, failing to address or consider them prior to launching an international program could result in lost opportunities.

© 2012 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at franchiseknowhow@gmail.com