Franchising Advices

How to Develop a Franchise Network Abroad

Ladies and Gentlemen,

I’m very happy to be here today and grateful for the invitation of sharing you some aspects about how to develop a franchise network abroad. It is almost impossible to accomplish that in just few words but I'll do my best. Any franchiser willing to export his concept needs to act with extra care. He must analyze the market  he intends to export and needs to choose the right partners. Usually he conducts a study to determine some specific economic parameters. In order to decide if a foreign market is welcoming for his franchise , the franchiser needs to answer at some questions and solve some issues.

1.First: is the franchise viable for that specific market? Does it need adjustments to fit the local or national custom or culture? The evolution of each franchise in a foreign area depends also very much of the franchise domain and the country where this franchise will be opened: it must obey the rules and legislation from the foreign country where it will be acting. For instance a very famous Romanian bet and gambling franchise can not be exported in Turkey or other countries that do not allow this kind of activities.  So before entering a foreign market,  the franchiser must determine if the franchise is ok  for that specific area. Sometimes the franchisers need to adapt their franchise system according the local or national customs; as an example, when Johnny Rocket's from United States opened a master franchise in Cyprus, they adapted the hamburger recipes according the Halal tradition: means the food respects Islamic laws and have a special certification accordingly.

2. Second- on the desired market the franchiser needs to verify for franchise rivals; if the franchise has competitors what is the difference between those? What offers this new franchise versus the existing one?  Also worth verifying the franchise potential abroad: is there a true potential for profit?

3.Third - an important aspect of international expansion is to determine the right level of investments: for instance the cost of the master franchise is different when trying to enter into an emerging market versus onto a developed one. The franchiser needs to determine if the franchise has a fair price and if leaves enough room for gaining profit in a reasonable period.

4. Fourth-speaking of financial issues a good idea might be to verify if the price for the goods or services provided to the clients is a reasonable one; the same product or service might have a different price in various area of the world: Pizza Hut, Subway, Mc Donald’s, KFC and the examples could go further more-they all have different price policies.

5. Fifth- to determine the best partner-this is also a very important way of achieving success abroad. The franchiser must decide between extending through a master franchisee or by other methods. The process of identifying the best partner from prospective candidates can be done either directly by selecting from a list of entrepreneurs or using national help from franchise consultants or franchise associations. Since different markets have different needs a brand needs to fit both domestic market and local partners and vice versa.  Most franchisers are careful in checking and qualifying their domestic franchisee partners in and they do the same internationally with master franchisers.   
Choosing the master franchisee with care and diligence is a huge step forward: some franchisers could be very happy to sell a franchise in a foreign country but the selling it is not equal with achieving the success. I was asked once how I see the relations between the franchiser and his network members; my answer was that: the franchise looks like a marriage. Finding the right partner is the same like finding you match made in heaven otherwise you go to the judge and file for divorce.

6.Sixth- what the brand has to offer internationally?  Demands for franchise business systems can be separated into few areas:
• brand name registered overseas; the franchiser could decide to protect the name internationally at least in targeted country he wants to extend;
• Operating model with proven system which could be adapted to locales around the world; a franchise must be versatile and ready to fit as much market as possible;
• Universal technology and software to operate the business; the concept must be viable all around the world;
• National marketing materials and programs which can be adapted to locales around the world- usually the master franchisee knows better the market requirements and he is able to establish best ways to determine mass media and marketing strategy campaign. Those actions are done only with franchiser’s consent.

7.Seventh -after deciding on the structure and approach for franchising worldwide, a franchiser must profile countries around the world that would adapt model with of population interested for this type of service or products.  Potential countries are ranked based on whether they would need the service/product model, economic conditions for franchising, total size of market in the field, government regulations for this type of activity and the overall growth potential of the opportunity. In addition, if the country looks like a great fit on all of the above factors, the company still needed to assess whether specific systems would apply in each country in the area of technology, marketing materials, software operating system and also brand-name recognition. Generally, if the country has the need and economic conditions, and the franchise systems can translate to meet those needs and conditions, the model will work in their community.
8.Eighth -another consideration is how well the brand name of the franchise translates into the local language.  It is important to do these assessments to see not only how well the model fits but also how well the branding fits. A franchiser must use consultants to understand if the concept is culturally unappealing.  Other franchise companies may want to check whether their product plays well in the target country.  In the target country, the master franchiser is responsible for those adaptations, but it is helpful to be aware of any potential challenges.

9.Ninth-the franchise agreement must be signed during a period long enough to allow the master franchisee or franchisee to deduct the level of investment and to make at least a reasonable profit.


When decide to go abroad I advice franchisers to ask for advice from domestic franchise associations or franchise consultants. Thank you very much. Good luck to exhibitors and organizers!