Planning to expand overseas can seem overwhelming at first but there’s an array of organisations, websites and publications to assist you, says Bill Edwards of Edwards Global Services
The reasons for taking a franchise brand to new countries are: (1) gain new sources of revenue; become less dependent on your home market; (2) increase brand value for all stakeholders; (3) enter markets where competition may be less; (4) and leverage your existing brand, intellectual property and resources. A recent survey of franchisor members by the International Franchise Association (IFA) indicates that 80% are either international now or plan to be international soon.
So, you have decided to Go Global with your franchise. How do you decide where to go, when to go, how to go and with whom as your international licensees?
First, read every issue of ‘Global Franchise’ magazine which covers the world and every sector of franchising. The details of what is happening in the rapidly expanding world of franchising is found in ‘Global Franchise’ magazine online and in print.
To help choose which countries you will enter you will need country information such as Gross Domestic Product growth rates and GDP/capita. We suggest the ‘Economist’, ‘Financial Times’, the Economist Intelligence Unit (EIU), the World Bank and the CIA World Factbook websites.
One of the best information sources are franchise associations. The International Franchise Association maintains a website that has information on over 70 countries. At the following link, you can find answers to many questions: https://www. franchise.org/ international We, of course, recommend downloading each issue of our company’s GlobalVue™ country ranking which has been published quarterly since 2001 and is available at the following link: http://bit.ly/EGS_ GlobalVue
Once you have chosen the countries you want to focus on, you can visit the website of the local franchise associations to find out what types of franchises are desired for countries. The British Franchise Association, the Franchise Association of Australia, The Brazilian Franchise Association (ABF), the Franchise Association of New Zealand and the Philippine Franchise Association are very professional associations with excellent and informative websites for research and contacts. Franchise association annual conventions are excellent venues to network with local franchisors to find out what us happening in their countries.
We also recommend contacting your company’s legal and accounting firms who may have contacts in other countries. For country tax information such as withholding taxes on license fees and royalties, go to the Deloitte tax guide site. Your bank might also have international affiliates who can offer banking services in other countries. https://dits.deloitte. com/#TaxGuides
Today many countries have franchise laws, regulations and disclosure requirements that are very different than what you might have in your home country. It is essential that you work with a legal firm with international experience to understand these requirements before you start seeking a licensee in a country.
A very important necessity for taking your franchise brand global is to register your trademarks in a country. Please do this before you start marketing for a licensee in a country. Otherwise you might find someone has registered your mark and it could be very expensive to get it back. The Madrid Protocol is an international treaty that allows a trademark owner to seek registration in any of the countries that have joined the Madrid Protocol by filing a single application. Then there is the Community Trade Mark (CTM) that is one trademark filing that covers the 27 countries in the European Union.
U.S. commercial service
If you are a US company, the U.S. Commercial Service offers help in market research, license candidate identification and due diligence in over almost 80 countries. They also offer country guides on doing business in countries around the world through their BuyUSA.gov website which can be used by companies from any country. Australian franchisors can contact AusTrade for help going global. https://www.austrade.gov.au
Also helpful to US companies are the American Chambers of Commerce – AmChams – in many countries who can be helpful in providing information about how it is to do business in a country.
Trade associations can also be helpful in finding information of country and finding licensee candidates. For the food and beverage sector, the National Restaurant Association is helpful in the USA. In Spain, the equivalent is Asociación Empresarial de Marcas de Restauración.
One source of licensee candidates are the large franchise expos that are held around the world each year. In addition to the possibility of finding a licensee these are excellent opportunities for a franchisor to see the local market, their competitors and what brand adaptations, if any, may be needed for their franchise to compete in a country. To find out where and when these events are held read each issue of ‘Global Franchise’ magazine!
In each country where franchising is growing there will be local consultants with excellent reputations who can help identify markets and candidates. Two examples are DC Strategy in Australia and Feher and Feher in Mexico. In Germany there is Master Franchise Germany®. For Asia, there is Asiawide Franchising based in Singapore. Companies like these are full service helping both local and international franchisors grow their franchise network in their country.
If your franchise requires a supply chain, like in the food and beverage sector, you will want to talk to your home country product supplier to see if they have international operations or international affiliates. Supply chain set up and management is a huge challenge for franchisors and requires considerable investment to ensure that your product arrives at your outlets around the world at the quality level that you require in your home country. Supply chains cover everything from product development, sourcing, production, and logistics.
Bottom line: There are numerous sources of information on the how, where and with whom of international franchise development. Using the resources defined in this article can help you successfully expand brand around the world.
About the author
William Edwards is CEO of Edwards Global Services (EGS). Contact him at bedwards@edwardsglobal. com or on +1 949 224 3896. From initial global market research and country prioritization, to developing new international markets and providing operational support around the world, EGS offers the only complete international operations and development solution for franchisors based on experience, knowledge, a team on the ground in over 40 countries and processes based on decades of problem-solving experience.