How to expand your business globally with master franchising
If you are looking to expand your business globally, master franchising might be the right option for you. Perhaps you have already established a lucrative network in your own country and are ready to take your business across the world. But why franchise? How do you set up for business in new countries and what do you need to know about running an internationally franchised business? In this post, we run through some of the things you need to know about master franchising.
What is the master franchise model?
The master franchise model is often viewed as the simplest way to grow a business globally. Master franchising allows you to grow a strong customer base and to increase your sales. However, master franchising can be a complex process and there are many things to consider.
How does master franchising work?
Under the master franchise model, you give rights to your chosen entrepreneur in the country you wish to expand into. In return, the master franchisee will make a considerable investment in your business. Your new master franchisee will then open multiple new businesses in various locations in that country. Basically, the master franchisee becomes the franchisor of your business in that country.
What are the benefits of master franchising?
Master franchising is the most straightforward and quickest way to expand into new countries. Also, your business will benefit from the sizable amount of investment from your master franchisees in each country.
Last week we explored the benefits of master franchising. Read our article to discover even more benefits of master franchising.
What are the downsides to master franchising?
Of course, master franchising isn’t right for every business and there are some things you will need to think about. After the initial set-up phase of the master franchise, the master franchisee will keep a certain percentage of the royalties from the locations and business set up in their country. You will also need to provide ongoing support to your master franchisee, which can be challenging and take up significant resource.
Furthermore, when you allow a master franchisee to set up locations in a certain country, you lose an element of control of your business. This can be frustrating for some business owners, who have worked hard to build the brand and the business from the start.
What steps do I need to take to expand my franchise internationally?
Taking a franchise across the world is no easy feat. There are many challenges and considerations to take into account. Here we have an overview of some of the things you will need to do, research and understand to expand your business internationally.
Documents and guidance for franchisees
You will need to create all the documents that franchisees will need to set up and run their businesses. It is especially important to develop clear guidelines when you are expanding internationally, so franchisees in foreign countries have enough information to run a successful business.
Choose the countries you would like to expand into
Make a list and decide which ones are most suitable and that may be the most profitable. Consider complications such as language barriers and times zones. You may also need to adapt your business model for optimum success in that chosen territory.
Choosing your master franchisees
Your candidates must have a good understanding of the local market and customer profiles in their area. You should trust them to make the best decisions for your business. Choosing master franchisees can be more challenging, as they will have more control and influence over your brand in their country than a regular franchisee.
Each country has its own franchising law, which means you will need to navigate the legal system of whatever country you wish to expand into. Of course, you should hire a lawyer to assist you, but some things you will need to consider include: intellectual property including trademarks, copyrights, trade name and brand. You may even need to make changes to your established brand in certain territories to meet intellectual property law requirements. You may wish to consult a specialist lawyer in the UK before you get started so that they can explain some of the process and requirements to you, and set out how much it might cost.
While there are no disclosure requirements pertaining to franchise agreements in the UK, other countries have strict rules which you must adhere to. Typically, you will need to provide the franchisee access to the Franchise Disclosure Document prior to any contract being signed.
Generally speaking, franchise agreements are subject to antitrust/competition laws. Important considerations are price-fixing and exclusivity agreements. It would be prudent to consult a lawyer about these matters before expanding into a new country.
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No matter what sector you are in, we are positive we have the right master franchise opportunity for you. From cleaning to accountancy, home-based business to white-collar franchises, your next opportunity is never far away. Find out more about how we can help you with master franchising today.