Franchise Development Services: Go global with franchising

Governments will have to look at developing programmes to assist franchise companies to export their Master Franchises, argues FDS Founder and Managing Director Roy Seaman

In today's international franchise market, it is highly recommended that a certain amount of caution and homework needs to be undertaken before marketing a brand and then promoting it to future partners. While the rewards of international franchise development can be significant, the best advice is always to take a number of small steps first.

International franchise development always takes longer and inevitably costs more than was first envisaged. However, there are now certain markets around the world where investors are beginning to search for specific franchise opportunities. Some of the markets where the healthiest of investors exist are the UK, France, Spain, and a number of other European markets. Likewise, serious investors exist in Dubai, Saudi Arabia and Egypt and all of these countries have a proven track record of successful acquisition and development of international franchise brands.

In formulating a franchise for foreign expansion you should always analyse demographic, economic and regulatory data from the specific target country. You should also consider the extent to which franchising in general is an established method of business and what laws, rules and regulations need to be adhered to.

When it comes to the promotion of the Master Franchise, look at the options before you proceed. These could be looking at a joint venture, or dividing a country such as France or Germany into specific regions. Both of these practices have proven very successful in the past.

A thorough evaluation of the short-listed applicants is critical and they need to sell themselves to you just as much as you need to explain your opportunity. In addition to having knowledge of the culture, experience of franchising and a network of business contacts, they need to understand that they have a serious responsibility in owning and developing the franchise in their country, and that they will not be dependant upon you other than for the initial training.
Hence you should always undertake a thorough background check, including discussions with local business associates and taking up references with professional advisors. You should also expect candidates to draw up their own outline proposals as to how they would acquire and develop the franchise. The alternative to Master Franchising is seeking a joint venture partner, and this can often prove a more direct model, so long as the SWOT analysis proves favourable.

I believe that a number of European governments will begin to recognise the importance of supporting their national franchise programmes. The American market has taken the lead through its Department of Commerce's franchise partner search programmes, which link US franchise firms to a global network of industry-specific country experts, brokers, attorneys and potential business partners.

Europe is just waking up to the fact that these programmes offer a genuine return on their investment for the participating country. Its governments need to understand the substantial difference between exporting products to exporting a franchise, which involves the total business method of sales, marketing and support. However, as franchising becomes an ever-increasing method of business expansion in the international marketplace, the demands put by companies directly onto their governments are likely to produce some new initiatives, all based upon the success of the American model.