How to establish international networks by franchising
Master Franchising provides a method for British franchisors to expand their operations into international markets worldwide. The Franchisor profiles this system for achieving your global ambitions
Having achieved successful expansion across an entire continent through franchising, North American companies pioneered the use of their franchising expertise to export their concepts, brands and systems into new countries in the 1980s. The majority of franchise models in the US centre around the use of 'Master Franchises' for individual states, where an individual Master Franchisee is responsible for developing a statewide network either through funding the development of a chain of outlets, or sub-franchising the concept to single-unit franchisees.
This concept was adapted to take brands into international markets, with a Master Franchise licence now covering an entire country in the case of European expansion, or an entire geographical region as has often been the case in the Middle East.
The UK has long been viewed as a highly desirable market for US brands, because of its size, the popularity of American goods and services, and its role as a 'stepping stone' into the EU. Among the US brands that have established successful Master Franchisees in the UK are Jani-King, Molly Maid, Swisher, Dr Vinyl, Rainbow International and Alphagraphics. The success of this methodology has encouraged its use by brands in other developed countries, which have recognised the benefits of exploiting the experience, contacts and language skills of local entrepreneurs and organisations to modify their concepts for new markets.
The opportunity to export their business concept and establish a global brand is encouraging British franchisors to look at Master Franchising as a vehicle for international expansion. The Filta Group is an example of a UK franchisor achieving success on the international stage through Master Franchising, so much so that the company has even exported its concept into the USA.
Last year Filta Group Managing Director Roscoe Urosevic revealed in an interview with The Franchise Magazine: "We have granted Master Franchises for FiltaFry in nine countries: Portugal, Australia, Greece, Netherlands, Denmark, Sweden, Jordan, Israel and Kuwait. The Kuwaiti Master Franchisee is running a wholly corporate operation, while the other Master Franchisees are sub-franchising to various degrees.
"The first couple of Master Franchisees approached us. They spotted our UK website, liked the concept and got in touch. We had no international expansion plan or strategy as we were concentrating on bringing the UK market to maturation and launching our new franchise concepts. However, we were impressed with the candidates and agreed terms to grant Master Franchises. Our shopping list of markets for future international expansion includes Germany, Italy, France, China, Indonesia and Malaysia. We are visiting these markets and attending exhibitions in order to meet Master Franchisee candidates."
Franchise Development Services has been assisting US franchisors with their plans to penetrate the UK, European, Asian and Middle Eastern markets for 15 years. Managing Director Roy Seaman favours the Master Franchising model because: "of all the overseas penetration methods Master Franchising is the cleanest, most sensible option, and it is this route which we recommend for most clients. You can export more than just products and services, you can also export less tangible assets, namely know-how, comprising all the research and development, systems and intellectual property behind the products and services."