Franchising Abroad: The Economic Argument

The world is getting smaller. Customers come from and visit everywhere, and brand names are powerful. There are many reasons to take your brand away from your home soil and overseas. Among the most compelling are the economic ones. International expansion has the power to benefit both franchisor and franchisee, to establish important relationships across country borders, and to create brand name recognition far more powerful than anything you can cultivate purely domestically.

Franchises are particularly attractive for global expansion, thanks to the model and the blueprint they provide. Unlike with an independent business, you can transport the business model and blueprint of a franchise system that has been successful in your home country. Think about it like a business in a box: all you have to do is ship it overseas. If you find the right partner who can follow the blueprint effectively, you get started internationally much more quickly than if you were doing it alone.

For the franchisor, international franchising builds the brand much faster than traditional expansion models. Instead of sending corporate teams into foreign countries to help open shop, which requires extraordinary manpower, franchising allows you to find partners in your target countries. Your international partners know the language, the local culture, and should share your values, vision, and goals, which allows them to grow the brand faster locally than any home office team could.

For the international franchisee, the benefits can be even greater. A good franchise company should be well established with a number of proven units open in their home country. With that established presence come training systems, ongoing support, and business and marketing systems that are already being successfully employed across the home country. All of those systems can be transported and adapted to the local marketplace, saving the new international partner a great deal of heartache from mistakes... if they follow the blueprint provided to them. It also saves them a great deal of time and money, both of which are vital but scarce resources when launching any business.

This partnership between franchisor and international franchisee allows both to reap many rewards, the most important of which is money. A solid international franchisee-franchisor partnership will allow both to recoup their investments more quickly than they could on their own. Global partners almost always sign multi-unit or area developer deals, so with the support of the brand behind them they should be able to expand quickly in the target country, thus recouping their investment much faster. The home office benefits from building its brand and brand recognition, which produces more overall franchise sales. When you work together to build a strong brand, both parties benefit.

But even with a well-established domestic brand, a company's first steps abroad can still be daunting. If you're new to international expansion, it's best to stick close to home in the beginning. Expand in your own hemisphere first, in countries that are relatively close to yours. As a U.S.-based company, some of our first international expansion efforts were in Canada, a market with growth potential and which also shares a common language. It is also physically close enough to the United States that we could easily travel there to check in on progress.

You also want to focus on building a strong and reliable international development team. These people will be key contacts for both new global franchisees and for corporate to work with to strategize each stage of global expansion.

Finally, get your house in order. Review your capital and resources to craft a realistic expansion strategy. Review your training, support, and business systems to make sure they're up to company standards and include best practices. These are the blueprints you will export and expect your new international franchisees to follow in order to expand your brand overseas. They need to be locked into place before you take your first steps abroad.

Once you've done that, take the plunge. Often we leave that part out as it seems obvious, but it's easy to get too focused on planning and forget you were meant to expand in the first place. Once you've strategized, planned, inventoried, and researched your international markets, you have to start looking for and signing international franchisees. There is no move more crucial than to actually start expanding. If you do it right, the rewards are infinite.

Tony Foley, International Director and President of UFG Services, has been leading United Franchise Group's extraordinary global growth for more than 20 years. He leads a dedicated global support team that has launched more than 1,400 franchise locations in more than 60 countries. He is a featured guest lecturer and speaker at industry events around the world. Contact him at 561-640-5570.