Going International? Donít Forget One Important Thing
by Ed Teixeira
Franchisors that are considering exporting their franchise concept to
other countries are advised to prepare by following a checklist of key
items. However, there is one area that is often overlooked or shortchanged
in this process.
Having been involved in international franchising as both a franchisor and
consultant Iíve found that the process can begin a number of ways. I recall
doing a franchise license in Japan that was initiated by a highly qualified
group of Japanese business people that sought a certain type of U.S. franchisor
for Japan. They ultimately chose my company and the mutual relationship was
highly successful and endured through the full term of the master franchise
agreement. In another case my strategy was to actively locate a master licensee
in a specific country by utilizing a broker. Franchisors may enter other
countries in a variety of ways due to the shrinking world we live in.
The following represents a general checklist for franchisors looking to go
- Have a successful franchise program in operation with a
minimum of 50 franchisees. The number of franchisees reflects a
level of franchisor experience.
- Be sure the franchise concept can be successful in other
countries. Due to local customs or consumer preferences some
concepts may not be adaptable. The U.S. Commerce Department
provides a good deal of information about country profiles at no
- Have competent staff available to implement, train and
support the new foreign licensee.
- All of the operating and marketing manuals should be current
and up to date. Marketing materials should be adaptable and
capable of being translated for use in other countries.
- Perform an analysis of target countries to determine if the
franchise will face competition. A number of competitors can
signal good demand for the franchise product or services.
- Narrow your choice of countries down to a number you can
investigate and target for prospecting leads. Focus on a
geographic region or specific countries for example, Eastern
Europe, Brazil, Japan, etc.
- Get advice from a consultant or advisor who has experience
in international franchising. You need to rely upon experts who
have recruited candidates, negotiated agreements and have
operational experience. Be prepared to invest some capital in
overseas visits and legal costs.
- Before implementing your international launch, apply to
register your trademarks, domain names and any IP.
- Have your franchise attorneys start on constructing a master
- Establish a program for finding qualified prospects in the
countries youíve targeted. This may include a strategy of using
a broker and other lead generation programs.
One item missing from this checklist, which is critical to an international
franchising process, are the materials that need to be given to a qualified
candidate. In many cases a franchisor will simply provide a prospect the same
franchise sales materials they provide a U.S. franchise prospect and nothing
more. Iíve had a client tell me that since they are a ďgreenĒ company they have
everything on-line rather than supplying printed material. This may play well in
the U.S. however, in some countries a candidate expects to see hard copies of
Here is a list of items that ought to be in an international franchise sales
packet. The franchisor pocket folder can be used to present these materials.
- Basic information packet for franchise candidates
- A fact sheet that includes highlights of the candidateís
particular country. This can be on one or two pages and doesnít
need to be in depth but rather should include demographics that
can relate to the franchiseís product or services. Draw a
comparison between market similarities in the U.S. and the
foreign country. I would include the master license fees for the
country or a particular region within the country.
- Absent an Item 19 disclosure provide key financial data from
U.S. operations that will enable the candidate to construct a
pro forma. Expense data, product costs, staffing levels and wage
costs can be provided. Verify compliance with franchise
disclosure laws if any, in the particular country.
- Have an outline of the key steps in the international
franchise process in writing. This would include discovery day
visit, letter of intent executed if applicable, etc.
When deciding to go international the franchisor needs to follow key steps.
In addition, itís important to have an information packet that can be given to
prospective licensees from other countries. Donít depend upon using the same
materials that are given to U.S. prospects and nothing more. Finally,
donít assume that what works in your home country will work everywhere else.
© 2011 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He
can be reached at email@example.com