Importing or exporting a brand as a master franchise licensee – opportunity or threat?
Posted 13/01/2020 : By: Debbie Dennis
was looking at a top 10 list of British explorers most of whom were from
centuries back, the most well known probably being Sir Francis Drake or Captain
Cook, and the only one in recent times, and still alive, is Sir Ranulph Fiennes
who is a known explorer in many different fields and recognised by the Guinness
Book Of World Records as the world’s greatest living explorer.
What does this have to do with franchising you are wondering, and the possibility of you acquiring a master franchise opportunity – it is all about understanding new places, new frontiers and unfamiliar situations. In short, as a potential investor in a master franchise you are about to become a 21st century explorer!
So, before you set sail it is not a bad idea to have some idea about what the journey may entail and to try to manage the risks while still being willing to enter somewhat into the unknown.
Our top ten
tips for an intrepid franchise explorer are these:
1) Be very sure that you want to go on this journey! You will be investing, potentially, a considerable amount of money, on acquiring the rights of a brand from abroad to bring into the UK or in preparing a UK brand for their concept and taking to another country. Start with very strong research on the market that you are in or wish to be trading in. Does the concept fit with local tastes? Perhaps it is something quite new and if so will the potential customer understand it? If you have to invest a great deal of money in first helping the market to know what the proposition is then you will need even more money and patience and time before you are likely to see a return. Is what they do already provided by strong local competitors whom you will have to dislodge?
2) The chances of any journey being successful are in enhanced if you have a local guide. So, has the brand that you are about to invest in been into any other country than their own so far? Have they positive strong experience that will help them to help you be successful? If you are approaching a business and asking them to ‘go international’ because you like the proposition, or the concept, then be very sure that their management team buy into the commitment they should make to you for your success.
3) You will succeed much more if you are working with a brand that has a clear strategy and expansion plan for certain key markets. You may be rejected by some brands whom you approach simply because they do not see the UK, or your destination company as important to them at this time, for many reasons.
4) Can the brand offer you a competitive advantage through pricing or the quality of the goods to offer to a specific target market? If not, then why do you think it can be successful?
5) You personally should have a good business background and a track record of having grown concepts. It’s not easy to expand a unit franchise business, so master licensing is a whole new level and cannot be underestimated.
6) Make sure that the brand itself is financially stable and well managed. Insure they have business methods, systems and reporting processes in place that will help you to manage your business and help them to understand how you are doing so that they can properly support you.
7) It is essential that the brand owns the trademark so that they can license it to you for the country you wish to trade in. You need this to protect your brand value and your intellectual property.
8) You are likely to be asked to pay a considerable amount of money for countrywide rights. Ensure that some of those funds will be used to provide you with a clear and detailed training programme – ask for evidence that they have this and that they have adequate support and international marketing collateral that will add value to you.
9) Is the brand that you have in mind commercially aware and a good user of IT. When you are trading at a distance effective communication will be essential and the use of an intranet for training and support would make sense.
10) Has the brand itself done any market research on overseas conditions? Are they ‘exploration ready’?
Having identified a brand you probably should think about getting some useful local support by way of engagement with people who have feet on the ground both as franchise consultants and lawyers to help guide you not just through the purchasing stage but the launch and development aspect.
Good luck on your travels!
Article by Nick Williams - managing consultant at Ashtons Franchsie Consulting