Are you one of the more ambitious franchisors wanting to expand into new international markets? If so, then you should seriously think about Master Franchising or one of the alternatives to take your brand into new territory. Take a look at some international franchising methods below.
The International Franchise Structures
A number of different structures have been developed to deal with the difficulties in overseeing international franchise networks.
The simplest structure for expanding a franchise overseas is by Master Franchising. In this situation, the franchisor awards Master Franchise Rights to a suitable indigenous individual or organisation (Master Franchisee) in the target country, often in return for a significant investment. The Master Franchisee secures exclusive rights to develop that country under the franchisor’s brand, trading style and system either by establishing a sub-franchised network, Master Franchisee-owned outlets or a mixture of the two.
In some countries (such as the US), one Master Franchisee may not be able to manage the entire territory. The Regional Franchising approach divides the target country into regions, for example, dividing the US into states, which are treated as mini Master Franchises. These Regional Franchisees must cooperate on national initiatives, such as marketing.
In some companies or industries, where sub-franchising is not permitted and the franchisee must own all-new outlets opened, a whole country may not be the most efficient size of a license, therefore the territory is divided, much like in Regional Franchising. Where no sub-franchising is taking place, this practice is usually called Area Development Franchising.
If the franchisor is capable of providing the support, it may opt for a Direct Franchise in a country, taking direct responsibility for recruiting, training and supporting a franchise network, through long-distance control from the headquarters, a subsidiary office in the target country or an appointed agent.
How We Can Help You
AFC are acknowledged as experts in national and international franchising and has assisted numerous brands to achieve growth. With our detailed International Franchise Development Programme, we can facilitate the best method of international expansion and assist your business from research through to international franchisee recruitment.