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The international expansion of a franchise network is often triggered by an external event rather than a carefully planned internal strategy. In my almost 10 years of helping franchise concepts reach international markets, I have noted that in many cases, it is a call or an email from an interested party in another country which "lights the international fire" within the franchise organization.
Once that call or e-mail is received, it becomes like a pesky mosquito, buzzing incessantly near the franchisor's ear and it won't go away. It is when international expansion becomes a real and concrete opportunity.
This is not necessarily bad, on the contrary, that fact that potential investors from outside the country are interested in the system is a sign that the franchisor is doing something right; however it is an opportunity that must be carefully evaluated and even more carefully planned for.
These are good starting points:
- Observe, study and analyze the targeted international markets, so at the minimum the following questions can be answered: Is there a real demand for the product or service? Is a market need appropriately met? What’s the size of the potential consumer base? Is there competition and what type? Will local sourcing be possible and are there robust distribution channels?
- Protect Intellectual Property (IP), which is one of the most valuable assets of the franchise system. Evaluate if the trademarks (including their meaning in English) project the desired and appropriate image. Could the transliteration of the brand be misrepresentative or offensive in the target market’s language? Once these questions have been addressed, registration of the IP will be extremely important and because different countries have different laws, the advise of a knowledgeable Intellectual Property expert is highly recommended.
- Understand local laws and business requirements, which as discussed previously with IP, can greatly differ not only from country to country but also within a same country between States, Provinces or Regions. Take advantage of any local contacts (such as the interested party, business or personal relationships) to get general information about what is necessary to start a business, common business practices and of course local franchise law. Mistakes or omissions in this area can prove to be quite costly and produce unnecessary delays so when the final “go” is given be sure to consult with local legal experts.
- Choose wisely the international expansion model. There are different expansion strategies such as International Master Franchise, International Area Developer, Joint-Venture, etc. each with its own structure, advantages and particularities. Carefully consider the current circumstances of the business itself, target market and even the capabilities of the interested investor to make this determination.
- Seek advice from those who have done it before. There are great resources within the franchise community that can help navigate through the sometimes rough and unforgiving waters of international franchising. Be it consultants, attorneys or even other franchisors that have had the experience be sure engage in meaningful conversations so that will surely be advantageous and ease the path to internationalization.
In the near future, when a call comes in from an foreign an exotic country asking for the international franchise program, the path is now traced.