Brian Duckett, chairman of The Franchising Centre, has some expert advice if you want to launch an overseas brand in the UK
Did you know 20 per cent of the franchised networks currently operating in the UK originally came from overseas?
When you consider that the cost of acquiring and establishing the master franchise for a mobile service franchise is often less than the cost of setting up a single unit for a premises-based business, you can see why many more people are now asking themselves: “Why should I become a franchisee when I could be a master franchisee?”
The skills required of a master franchisee are very different to those required for simply running a franchised outlet. However, for someone who’s looking to be part of a proven system with established support structures, master franchising can offer far greater potential.
Making your choice
There are many franchised businesses around the world that could be successfully transferred and adapted to operate in the UK. What should you look for when considering becoming a master franchisee?
The first criterion is to pick a business sector in which you can see yourself operating, then select a brand for which you will be proud to be the ambassador. If you’re not sure which businesses to go for, brokers such as ourselves will have contacts in other countries who represent proven systems with ambitions to trade in the UK.
Both parties should be looking for positive mutual commitment to building a sound business over many years, which will involve working together with a common sense approach to financing, training and support.
Unless the franchisor can show evidence of a policy decision to embark on and properly resource an international development programme, supported by a detailed business plan with input from people who know the game, then neither it nor the potential master franchisee should go any further.
You should not consider a franchisor that appears to be starting international development on a whim any more than it should consider someone who approaches it out of the blue saying: “I love what you do, can I do it in my country?”
Something to look for is what basic market research has been done by the franchisor on its product or service in the target country. If none, what makes it think a franchised network can succeed there?
Even if the franchisor has done some, you will need to verify it with some of your own when preparing your business plan, as well as considering the potential differences in key ratios, such as property costs, wage rates or petrol prices.
You also need to build in some franchising research. How does the market for potential franchisees differ in the UK compared to the franchisor’s home country? Is the proposed fee structure and rate of franchisee roll-out realistic? What about the costs of franchisee recruitment or local laws and cultural differences that may affect the operation?
You will want to know about the franchisor’s track record. If it comes from a country that requires pre-contract disclosure for domestic operations, ask for a copy of the relevant disclosure document.
Ask for contact details of its other international master franchisees, so you can ask them about their experiences. If the franchisor doesn’t have any others or won’t let you speak to them, consider that carefully in your decision making process. Don’t let it put you off entirely though, because there’s always someone who has to be the first.
Having decided which business or businesses might suit you, you should start by approaching a number of those that meet your criteria, but be aware that the franchisor will have its own criteria and will have a recruitment process through which you will have to progress at its pace.
This can start with simple online or telephone screening to decide whether there’s a potential match. Different franchisors have different processes, but they all lead up to the all important discovery meeting at the franchisor’s office in its home country.
By the time you get to this stage, you will need to be pretty well sold on the opportunity because it’s obviously a serious commitment to make such a trip. Similarly, the franchisor will need to be pretty well sold on you if it’s to devote the required amount of time and personal resource to the visit.
After the discovery session, both parties will give and receive feedback and agree what outstanding issues need to be resolved. Your franchise consultant will take you through the process of preparing a franchise development plan, agreeing a development schedule, negotiating the franchise agreement and finally acquiring the franchise rights for your market.
Your role will then be to initially open one or two outlets yourself in order to test the concept in your market and devise and test any adaptations to the system that may be required for successful local operation.
After that, you’re ready to launch into full scale franchising and start to build the UK’s next big franchise.
Bear in mind that franchising is a completely different business to that of delivering the products or services that are the subject of the franchise. You will need to learn, or to engage people who already have, the skills required to recruit, train, manage and motivate franchisees.