An International Affair - The Benefits Of Growing Through Franchising

Updated: 15th Feb 2008

An International Affair - The benefits of growing internationally by franchising, even if the business does not franchise in its home market, are undisputed, writes Brian Duckett.

Considering whether to develop a business internationally is an exciting process. The prospects for expansion are immense, and the chances of success dramatically increase as the business adds more outlets, provided this is done in a structured and meticulous way. The benefits of growing internationally by franchising, even if the business does not franchise in its home market, are undisputed – more outlets, more quickly with much less financial investment required, compared with organic growth.

In short, international franchising offers a whole raft of previously unexplored opportunity, writes Brian Duckett, Chairman of the Howarth Franchising Group.

The option of expanding a business abroad is rarely contemplated by most business owners, simply because they rarely have time to even think about it or, if they do, they don’t believe they have the resources to manage it.   Then one day, out of the blue, someone says to them, “I like the look of your business and believe it would work well in my country. Can I take it there?”. Here begins the process of international contemplation – but not necessarily completion! One of the most important factors to consider will be how to select the best person, or organisation, as the franchise partner in an overseas market, and that will rarely be the first person who makes an approach.

Provided that the business boasts a successful track record and an established, easy-to-replicate format, the opportunities for expansion are potentially huge, limited only by the vision of the business owner. New markets may be easier to develop, simpler to influence or potentially more lucrative. Many different channels and systems exist that can be tailored to fit the format of even the most unlikely international network, but franchising typically offers the least risky solution. 

Simply put, there are two main ways of franchising internationally – direct and indirect. Direct means working with one partner who owns and operates a number of outlets in a defined country or region ; i ndirect is about working with a partner who sub-franchises within a defined country or region to individual business owners with one or more outlets. The right entry strategy – direct or indirect – can vary from country to country, and may even be based on the skills of the applicant partner.

Before attempting a move into uncharted territory, a certain level of caution must be exercised, irrespective of the level of domestic success. While there are many benefits to expanding a business through franchising, the reasons for progressing must be based on sound business sense rather than a whimsical desire for a glamorous presence in a few international markets. So what exactly constitutes a potentially successful franchising opportunity?

Vying for Victory

Ideally a business that is looking to expand internationally should meet all the criteria of a business looking to expand domestically, plus a few more elements specific to the particular market. There must be a proven, easily replicated, simply learned and profitable business format, supported by a carefully defined, long-term international development strategy for the business.

To work internationally the business will need to provide an additional support arm. Sufficiently developed profits, resources, structures, and systems are required to ensure an organisation can meet the greater demands of activity abroad, together with an understanding of all the development options and their full impact on the business. International franchising is not a consideration which should be taken lightly, and as such, a strict evaluation process must be undertaken. Scheduling is also crucial to ensure it is the right time to enter the international arena. Get it wrong, and the company could risk financial loss or even failure. . Get it right and the company could be on the way to creating a global brand.

Mastering your market

Having identified that international development by franchising is the right channel for success, it is necessary to evaluate the more detailed criteria to select priority markets, assess the best market entry strategy, prepare the franchise offer package, decide the optimum levels of upfront and ongoing franchise fees, draft operational and legal documentation, develop the profile of the ideal franchise partner, and commence the marketing and recruitment activity.

Rarely will the existing business have the skills or resources to do this effectively. Often, this is best outsourced to experienced international development consultants who can manage the entire process , until the project is sufficiently developed to justify the appointment of an international development director.

International franchising is an innovative way of growing a business into other potentially more profitable markets and of creating an international brand. It offers opportunities for expansion that other models do not.  Above all, however, the business must have experienced success in its domestic market before even considering international expansion . As a basic rule, the winning formula needs to be easily replicated abroad before it can be applied. Once this has been achieved, the world is a franchisors oyster!

The Howarth Franchising Group includes The International Franchising Centre which provides a development process and bespoke matching service for international franchisors and potential master franchisees, helping franchised systems to expand worldwide

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