Six Tips for Taking Your Franchise Global
"International expansion is not for the faint of heart," warns Mark Siebert, founder and CEO of franchise consulting firm iFranchise Group. "It's for companies who are really committed to it." Here, Siebert offers his advice on how to make your concept a success outside the U.S.
1. Make sure you have the resources to support international expansion. Leads from foreign countries can be tempting, but don't rush in. It requires time, effort, people and capital to successfully transition a domestic franchise to an international market.
2. Choose which international market to expand into. That's right--market, not markets. "Going into a foreign market is a significant endeavor," Siebert says. "Don't go into multiple markets at once. Choose one or two at most to focus on in the short term." There are a number of different factors to consider in choosing which markets to target, including time zones, language, laws, customs and competitors.
3. Decide on the structure for your international franchising. The two main options to consider are master franchising and area development. A master franchisee is granted the right to sell franchises in their area. This model works well in markets with large middle classes and a high acceptance of franchising, but it also requires you to train the person not only to be a franchisee but a franchisor. Alternately, area development deals offer a single operator the right to open multiple locations themselves. You'll also need to decide what types of franchise fees and royalties you'll charge, and what development schedules you'll require.
4. Find your master franchisee or area developer. "Don't just rely on random encounters over the internet," Siebert says. "Go to the market and seek out the best person." In your search for the candidates, you can get assistance through the Department of Commerce's Gold Key Matching Service, attend franchise trade shows and expos in your chosen market, or enlist the aid of a development company that specializes in helping businesses go international. And always do your due diligence before making a deal.
5. Adapt. If you want your franchise to succeed internationally, chances are you'll have to make some changes to your business model. Develop a prototype and figure out what those changes are. You might need to change the products or services you offer, adjust how you advertise, make adaptations to the equipment you use or even change the name your business goes by. Naked Pizza, for example, opened its first international location this year in Dubai, United Arab Emirates--under the name N_K_D Pizza, out of respect for the culture.
6. Expand. Once you've made all of the necessary adaptations to make your prototype a success, it's time for your journey into international franchising to really begin.