Are You Ready to Franchise Internationally?
by Ed Teixeira
At some point in time, franchisors will start receiving inquiries from
international prospects. For new and emerging franchisors an interest in
their franchise from other countries can be flattering. The thoughts of having
franchisees in other countries can conjure visions of new found profits with a
touch of prestige. Mature franchisors who have sold out a good portion of
available territories in their home country see foreign markets as a great
opportunity. However, whether a franchisor has 50 or 500 units the decision to
take the franchise international is an important decision. If a franchisor is
not properly prepared to franchise into other countries, a mistake can poison
the franchise brand in that particular country. International prospects require
validation just like domestic franchise prospects. It is easier to correct a bad
franchise decision in the U.S than it is in another country.
Before a franchisor decides to export their franchise concept to other countries
they need to perform some self analysis and make sure they’re fully prepared for
this new venture.
Following are some important steps to follow before going into foreign
- Have a solid franchise program in operation with successful
franchisees and good franchise relations.
- There should be a minimum of 50 franchisees in the home
country. Although not a strict requirement, a minimum of 50
units indicates a level of franchisor experience.
- Be sure that the franchise concept can be successful in
other countries. Due to local customs or consumer preferences
some concepts may not be adaptable to other countries. The U.S.
Commerce Department provides a vast amount of information at no
cost about country profiles.
- There needs to be competent franchisor staff available to
implement, train and support the new foreign licensee.
- Make sure that all of the operating and marketing manuals
are current and up to date. There should be marketing materials
that can be adapted and translated for use in other countries.
- Perform a competitive 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
- Narrow your choice of countries down to a set number that
you can investigate and target for prospecting leads. At the
outset focus on a geographic region such as Eastern and Western
Europe or Japan. As an example, China offers an enticing market
but has a number of hurdles to entry that are not easy to
- Get some advice from a consultant or advisor who has
experience in international franchising and licensing. You need
to rely upon experts who have prospected 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 and any IP you own.
- Establish a program for finding qualified prospects in the
countries you’ve targeted. This may include a strategy of using
a broker and lead generation programs.
- Lastly, don’t expect to receive a licensing fee until you’ve
invested a good deal of time and effort in the entire sales
At some time during the life of a franchise company, there will be an
opportunity to sell franchises in other countries. In the Internet age,
international prospects will find a franchise opportunity more easily and often.
A franchisor will face the temptation of embarking for foreign lands. Before
deciding to export their franchise a franchisor should be sure that their
concept will work and they have the resources to support the new licensee.
© 2010 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He
can be reached at