International franchise development is a safe and supported technique of business expansion. Growing a business internationally through franchising involves certain elements of what is needed to set up a network in a different country. Franchising techniques needs to be paired with the correct local positioning of the franchise proposition and the identification of the most franchisee. The new program is developed and the company goes through an evolution process wherein they start doing business abroad. This is why international franchise business management is crucial.
Taking the franchising option as a route to develop a franchise system in international markets should not be viewed as a quick and easy option. It is doable but requires strategic planning based on knowledge, expertise, sufficient resources. International franchising can lead to speedier expansion, a more self-motivated local sales force who understand local issues better, better organization and systems, and more control of front-line sales, marketing, management and delivery processes.
There are many companies large or small, who believe they know how to run their businesses well, domestically or in a few markets, that they will be able to successfully franchise the business in all international markets equally well. These assumptions should be put aside at the very beginning.
International franchising requires careful and cohesive strategic planning, management and execution, the commitment of all the respective discipline heads to the franchise operation as a franchisor. There should be no comprised with the quick wave of a magic wand or a half-hearted modification of the domestic business model. As regrettably, some consultants may lead potential franchisors to believe! International franchise expansion can be an extremely lucrative strategy for those who meet the necessary prerequisites to last the journey.
Few fundamental preparatory steps a potential international franchisor should take to ensure it has a sound international development strategy.
Some of the key points of considerations are highlighted as a starting point, each of which needs to be carefully and comprehensively analyzed, ideally with experienced advisors who have the international and local long-standing franchise perspective.
Once a realistic assessment of domestic operation has been conducted and the potential franchisor is reasonably certain that it has the necessary resources, stamina and focus to enter the international franchise arena, it should:
- Recognize the appropriate markets
- Conduct market research and SWOT analysis
- Find a suitable franchise route to each market
- Finalize the franchise proposition
Country analysis plays an important role. A strong business plan must covey all the possible details of the franchise.
- Potential of the business and market
- A thorough estimate of the competitive analysis
- Franchise training & support
- Reporting format and provisions of support to the franchisee
- Financial models for the franchisee
- Determine detailed tasks and time frames
- Entry into the selected international markets and the impact of franchising your brand
Many franchisors, particularly at the initial stages of their international development select their ‘priority’ destinations by reacting to one or several ad hoc enquiries from overseas markets. Assessing the true viability of expansion into those markets, based on an effective and well-planned business development strategy creates the bridge of franchise success.
When not planned properly, it leads to the selection of the wrong franchisee, an inappropriate franchise entry method, reactive franchise support, offer of too big a territory or not large enough of a territory, and over or undercharging
fees. Clear and relevant sets of assessment criteria should be considered to select the future overseas markets.
The criteria should cover:
- Size of the market
- Government policies – possible state/private funding for regional franchise developers
- Local legislation affecting production and retailing of your products or provision of your services
- Demographics, working population, age profiling and geographical concentration
- Ease of doing business
- Likelihood of generating returns in the first few years of franchising
- Franchisees’ capabilities to recruit and train staff and availability of sufficient local appropriate manpower to support the franchise offer
International franchising is an efficient way of expanding your business overseas. Finalize your franchise business plan. Take the steps required to ensure the international markets, local franchisees are well in tune with the proposition of the business offering. Create a powerful international franchise business management with a help of a franchise consultant if you are not able to do all the groundwork required. This will both save time and energy and get the best for your international business expansion.
