Franchising is a great tool to expand in different markets. International expansion needs proper planning. Most franchisors avoid it as they see it as a costly affair. This is only because they lack clarity on how to solve the problem. They do not see the side of rapid growth that can be achieved with international expansion. International franchising has made many brands bigger than ever through international franchises.
A system for global improvement has to be done on an evaluation of franchisor assets and a cautious assessment of the business. There are several issues faced when it comes to how to franchise internationally. The mistake franchisors do is keeping the same strategy for every market. Take pricing for example. A product pricing model that works in India will not work the same in the European countries. This also applies to the franchise fees, royalty, and almost all aspects of a franchise development strategy.
The franchisor has to do a feasibility study to ensure the expansion is worth the costs incurred. An ill-informed understanding of country direct and indirect competition can often lead to challenges in a successful global expansion. Charges should be set solely after assessing costs. Expenses of shutting an international business can be higher than opening a franchise in another country.
In the early stage of your international expansion strategy, it is important to engage the services of a reputed franchise attorney who knows local counsel in countries where you want to develop your system.
As soon you consider expanding overseas, you must ensure trademarks are set in the countries you want your business to grow. International franchise contracts must be done attentively. The international franchise agreement is much different from the franchise agreement used locally.
Strategize for your International franchise Growth
How ready are you?
Franchisors should have a profitable business model. Core competencies to provide all levels of support and the ability to replicate these attributes in other countries. Management has to provide support to the franchisees just as it supports domestic franchisees.
Is your staff well trained for international Franchising?
Structure on how are your internal resources going to support the expansion. How will they be able to support franchisees in other countries in each area of the business? If you should use your current or if you’re planning to hire local talent is a major concern. Will it also be meaning a higher impact on the cost structure for the expansion? This needs to be well planned in advance to engage the franchise in a better manner.
What are the current finances revealing?
Expansion is an expensive affair. Hence, if you are hardly able to make good in the local markets, create enough funds which do not affect your current operations and your expansion process.
Have you done market research properly?
When it comes to international franchising, there cannot be a standard solution for everything. Every market has to be carefully researched to understand the needs of the business, the target market, and the franchise partner.
Failure to understand culture is very important. Such an absence of clearness can be a significant issue for franchisors setting out on an international expansion.
For example, McDonald’s had to modify their system to adapt to the market in India, where beef is not a traditional food item.
Look at the general mistakes done by the franchisors:
- Expanded in country without conducting proper research if there was potential market to begin with
- They did not make an organization structure with the right ethos able of managing with diversifying
- They don’t have an adequate track record in local market and had exceedingly immature working frameworks
- Did not develop a well thought-out and developed franchise package
- No competition advantage to maintain profits in the long term.
- Fee levels set are too high which does not allow sufficient returns to the franchisee.
- No clue on the support & logistics structure
- No infrastructure design to help the franchisee. This may be in terms of CRM, IT monitoring, reporting procedures etc.
Expansion does not only mean getting your franchise manuals in different languages. Training and support also are equally important. This requires dedication from all of your management. Solidapprehension of what you do well, and a willingness to work cooperatively with your franchisee to adapt.
International franchise development has opened various entryways for independent companies hoping to uncover new streams of income. The international establishment can be one of the most thrilling things you can do to grow your business and stimulate your idea. While it tends to be costly, tedious and here and there baffling, it can likewise be exceptionally fulfilling. If you conclude international franchise expansion is ideal for you, partake in the excursion—and make certain to keep away from normal slip-ups that can wreck your franchise system.
