Pip Wilkins, chief executive of the British Franchise Association, has some words of wisdom if you’re considering investing in an overseas-based franchise
Franchising as a model to expand an existing business is something that has been successfully used in the UK by many brands. Its structure of a local business owner, combined with the proven system, support, brand and economies of scale of the network as a whole, is a powerful mix.
As a result of this, some extremely successful businesses have used franchising as a way of expanding into new markets abroad. In the UK, we have seen a number of brands establish themselves here through franchising, such as Home Instead Senior Care and McDonald’s. This can be positive for the UK economy, as it means much of the revenues generated by the franchise businesses in the UK remain in this country.
Similarly, British companies use franchising when expanding into foreign markets. These include VIP Bin Cleaning and Water Babies, plus others, such as Marks & Spencer, who don’t necessarily use the model within these shores.
When looking at taking on a franchise from an overseas-based business, as with all franchises, you need to do your research on the company, the market and your own capabilities. However, if the franchise you’re looking at is new to the UK, it’s advisable to spend even more time on this step.
Interviews and meetings with the franchisor are part of the process with any franchise, so if you’re dealing with a business coming over from abroad you need to know if you will be dealing with the business directly from its home country or a master franchisee based in the UK.
If you’re dealing direct, you need to be secure in your mind about how the franchisor will support you from the home country, how easy it is to meet with the company prior to and during the operation of the franchise and, of course, the ability to overcome any language barriers. You will also need to be sure it has fully understood the UK market in terms of its culture, laws and demand for the service.
You may find you have an opportunity to become a master franchisee, which means you will be acting as a franchisor to a defined area - possibly the UK in its entirety. Again, you will need to fully understand the commitments, structure, timescales and costs.
Make sure you check the brand’s standing in its own country - find out if it’s a member of its home country’s franchise association. If you’re dealing with a master franchisee or franchisor in the UK, you would want them to have British Franchise Association membership.
As you look at the different opportunities, you may come across a business that could change your life and give you a whole new challenge and outlook.