If you are considering franchising outside India, you will realize that international franchising is very different from what is followed domestically in India. Further more a lot of companies who have been using company owned operations nationally, would like to go global, through a elaborate franchise strategy. In both the cases, a new program is developed and the client goes through a evolution process wherein they start doing business abroad.
A international franchise strategy could involve granting rights for the entire countries or for specific regions within those countries or setting up operating units and subsidiaries. Essentially meaning that you might need a local representative who can assist you with the local issues and help you reach out the local networks. We then help you find such initial contacts, prepare the right offerings for them, qualify them, negotiate with them and finally ensure that they are getting results on a timely basis.
We translate and transform cultural obstacles into creative opportunities, under your guidance. We ensure that we to listen to your objectives and provide you with practical options for implementation. We can help you achieve World Class Franchising Practices. We are also connected with some of the finest franchise consulting & brokerage companies across the globe as we partner with them and exchange synergies on franchising for our mutual clients. Hence we could be your one point contact in helping you franchise across the globe.
Points to cover when Structuring a Master Franchise:
- Franchise Structure: Country Master Vs Sub-franchise vs. Area Rep
- Territory size should correspond to number of units to be opened.
- Require that chosen franchisee open showcase and training unit(s) before selling franchises.
- Development schedules to ensure short term and long term goals are set and to pre-empt competition.
- Initial term should coincide with or extend just beyond the development schedule.
- Allow franchisees who completes development schedule on time to renew for one or more additional terms, but retain the right to require establishment of additional franchises during any renewal term as a condition of renewal; if
- Area Rep fails to comply or renew, franchisor may take over the area or appoint a new rep to manage the area.
- Duties of a franchisee may include but not be limited to:
- Contributing to Franchisor’s Franchise lead generation activities, such as advertising on the Web and national publications, preparing videos, and printing brochures, generating additional franchise sales leads,
- Qualifying these leads,
- Following up with qualified leads until ready to sign,
- Filling in blanks in documents for franchisor and franchisees to sign after the appropriate cooling-off periods,
- Training new franchisees at showcase unit,
- Assisting new franchisees with opening of new units,
- Periodically visiting with franchisees in area,
- Coordinating marketing, testing, and introduction of new products within area,
- Conducting refresher training,
- Training new managers for franchisees when necessary,
- Reporting to franchisor on franchisee compliance and recommending termination, if appropriate, etc.
- Duties of the Franchisor may include:
- Coordinating Internet and multi-territory marketing for franchise sales leads,
- Providing lead generation and sales tools,
- Turning over “local” leads to franchisees,
- Training in franchise marketing and sales,
- Training the franchisee in training, assisting, and supervising franchisees,
- Coordinating system-wide product marketing measures,
- Providing Area Rep with new developments to be introduced to the market,
- Conducting annual franchise meets, etc.
- Typical transfer and right of first refusal provisions should be included.
- Typical default provisions should be included.
- Typical choice of law and venue provisions should be included.
- Typical confidentiality and non-compete provisions should be included.
A pro forma should be developed to test economic assumptions, such as the initial master franchise fee, split of individual franchise fees and royalties, and how to handle product sales and commissions; this should also include a projection of the initial investment and ongoing expenses that the franchisee/area rep will incur and the anticipated cost to the Franchisor to establish a franchisee/area rep.
We may often use a franchise show abroad as a convenient platform for visits to particular countries or regions, but the preparations for such visits are all-important. Our main purpose is always to pre-arrange meetings with the best prospects ahead of the show and meet with them during the show, but at a different location. Our booth at the show may promote several franchise offers — and some of our clients participate just for the exposure at the show — but the more effective approach is to use the occasion to close sales apart from the show, using the show simply as a base of operations. (Of course, having several clients with different target markets join the show helps defray the cost of attending the show, and the reduced cost for each client makes it possible for many to “test the waters” in new markets. As such, this approach is a win-win solution for all involved.)
The real work, however, takes place before we leave for the show. This work is not dissimilar to that of assisting with mergers and acquisitions. We are looking for the right strategic partners, and our contacting them is more on the basis of equals joining forces than our selling them on our product, although there is always some selling to do. We always prefer to have a few suitable candidates in the running at the same time, and our tactics may differ for each of them, as they may need us and we them for different reasons. Obviously, in order to reach the best candidates, we need to research each market before contacting the candidates. This pro-active approach is designed both to eliminate interested, but inappropriate partners, and to learn who would be most suitable and what they need. Simply “taking orders” at a franchise show does not even start to provide these advantages.
Finding the right candidates is as much art as science. The science side is rather obvious and similar to the domestic scene, in which a company like HLL acquires brands to gain dedicated channels of distribution. The art side has more to do with understanding the existing dominant players and not so dominant players of the local economy, and especially, whom to avoid. Here, we use both our own network of contacts, commercial media, and available commercial governmental and other private trade information facilitating organisations. On occasion, it may even be appropriate to hire a local investigator to verify some information. Our initial research is not meant to be exhaustive, however, but just sufficient to gain and understanding of suitable candidates. Our subsequent one-on-one discussions with the same might reveal a need for further investigation, but any controversy or uncertainty may simply lead us to concentrate on other candidates.
Because the approach and cost may vary greatly, we tailor each search assignment to the needs of our clients. You may prefer some strategic advice or complete out-sourcing of your international operations, and we are prepared to assist at any level.
You could also visit our franchise portal, franchisebazar.com and showcase your brand in the relevant section seeking master franchise.