Product Sourcing Abroad: Securing Your Supply Chain in Advance

Not every country has the products your franchisees will need when they need it and at an affordable price. Sourcing locally is normally ideal. But you will need to do advance work to determine whether suppliers in the local market can provide products that meet your standards - including protecting your trade secrets if it is necessary to provide the supplier with confidential information about the ingredients of your secret sauce.

Speaking with other franchisors who are conducting business in the foreign market can be enlightening because they may be able to provide you shortcuts on solving problems that are common in many markets. The U.S. consulate and business services representatives can also be helpful in identifying and vetting sources for raw materials and products.

Additionally, you will need to monitor ongoing compliance by the suppliers in the foreign market and include it in your overall investment costs for expanding internationally.

The U.S. Department of Commerce's International Trade Administration collaborates with 19 U.S. government agencies to run the website www.export.gov/welcome, which assists U.S. businesses with planning, developing, and executing international sales strategies. On this site, you can request commercial assistance for a fee from a U.S. embassy or the U.S. Commercial Service's Gold Key Matching Service, international franchisee searches, international company profiles, and customized market research.

In addition, the World Bank offers free tools to assist in researching a foreign market. The first tool is an online open access data platform to research global development data. The second tool is its Development Economics Group (known as DEC), the premier research and data arm of the organization. The DEC publishes numerous comprehensive global development reports. For example, check out its Doing Business project, which provides objective measures of business regulations in 190 economies and selected cities at the subnational level. Similar market reports are published by the International Finance Corporation, a member of the World Bank Group.

 This is an excerpt from the book Franchise Management for Dummies by Michael Seid and Joyce Mazero.

 Joyce Mazero, a shareholder with Polsinelli PC, a law firm with more than 875 attorneys in 22 offices, is co-chair of its Global Franchise and Supply Network practice. Contact her at 214-661-5521 or jmazero@polsinelli.com. Michael Seid is managing director at MSA Worldwide. Contact him at 860-523-4257 or mseid@msaworldwide.com.