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Is it a good sign that a franchise recently launched in the UK is active in other countries?
answered by Shelley NadlerLegal director at Bird & Bird
Yes. It may be that a franchisee can take advantage of an internationally renowned brand or a unique concept that was not otherwise available in the UK. This doesn’t mean, however, you should accept that because a foreign franchise has successfully transferred to other international markets it will work in the UK.
There have been a number of franchise brands - particularly from America - that have come to the UK following international expansion that have not been successful in the UK. In some cases, it has taken several attempts before the franchise has proved successful in this country.
It can be difficult to transplant and operate a franchise in a new country. The franchisor in the UK may be a master franchisee appointed by the foreign franchisor or the UK subsidiary of the foreign franchisor.
In each case, the master or subsidiary should have carried out extensive market research to ascertain if there is a market for the goods and/or services offered by the franchise in the UK and if any adaption is needed for the local market.
The UK master or subsidiary should have operated the franchise itself through a pilot operation to test whether the business is viable in the UK and fine-tune the operational side to conform to the local environment.
A potential franchisee should ask how the franchise has been modified for the local market and for evidence of the results of pilot testing by the UK master or subsidiary.
Shelley Nadler is a legal director in Bird & Bird’s international franchising team and has many years’ experience of advising on all aspects of franchising.
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