Expanding your homecare service overseas will normally require the services of a master franchisee, says Carl Reader
If you are intending to expand your thriving care home business overseas, using a master franchisee can be a good way to go. Master franchises are an increasingly popular structure option in the franchise world, and it’s not difficult to see why.
Generally, a master franchise is offered for an entire country, and so the idea that a franchisor can enter an entirely new market without the need to overcome many of the common challenges of doing so is highly attractive.
While of course adequate research must be done on the part of the franchisor, the primary responsibility for essentials such as an extensive knowledge of the economic environment, in-depth market research and even the problems of language barriers lies with the master franchisee.
A master franchisee has a very varied and challenging role, and that’s why it’s key to find a good one. As a minimum, here’s four things to look for in a master franchise:
They must have a full knowledge of the local region
The prospective master franchisee must hold a strong knowledge of all aspects of running the business in your target area or country. Any prospective master franchisees should have a comprehensive business plan to support your own robust international development programme.
Their plan should be substantiated with thorough research (which should hopefully align with your own research findings).
Before sub-franchising, it’s usually expected that a master franchisee operates a pilot franchise to test the concept within the new territory and within the new markets. Doing this is extremely useful for pinpointing and addressing the subtle (and not-so-subtle) differences in business between nations.
For example, although the UK and US share a common language, the business customs, culture and demographics of the two nations are very different. There may be different sensitivities and legislation, or it may just be that the expectations of the home care industry are not what might be expected elsewhere.
They must have a strong business background and appetite
A master franchisee should be expected to have a strong corporate level background, together with significant evidence of management and leadership in their career. Ideally, this will be in a sector relevant to your own.
Once they’ve run their pilot outlets, they will effectively be taking on many of the responsibilities that a franchisor traditionally does, such as recruiting franchisees within their designated territory and supporting them to build their businesses.
Therefore, they should have experience of recruiting, training, motivating etc. and especially experience within franchising, so that they can truly hit the ground running and scale the business effectively.
Of course, in home care, (or indeed, any other sector), you also need their total passion for what your franchise does, as this is vital.
They must have adequate funding
Not only is it likely to be a huge investment in buying the master franchise in the first place, but a master franchisee also needs to be well capitalised beyond this.
This is so they are able to grow the network to its full potential in the new area. Ensure your due diligence is comprehensive and detailed. I’d also recommend using an experienced franchise accountant who understands the master franchise model in detail to ensure projections and anticipated ROIs are realistic.
Partners must be someone you’re willing to work with long term
At the end of the day, can you work with them? That’s an essential requirement. Gut instinct that you can work well together speaks volumes here. Will they be a brand ambassador for you and your franchise? This is a large and long-term relationship and commitment, so ensure you are comfortable with both the personal and business relationships that come with a master franchise.
Once you’ve sorted the essentials above, you’ll have a strong profile for your ideal candidate. Finding the right person will be a challenge, but it is possible.
I’d start by doing some research into finding out who the best franchise brokers are in the region or territory. International franchising has certainly grown in popularity over the past decade or so, however there’s still only a limited number of experienced advisors out there, and the knowledge of these, together with their network of global contacts, is truly invaluable.
Bear in mind that enquiries will probably come in from across the world, and time differences and languages are just two of the things that can complicate the process. Therefore, I’d recommend the use of local franchise brokers or consultants to improve efficiency, as well as to tap into the benefits of a local expert.
I’d also recommend building your profile to become known in the region’s industry from a global perspective, as this can be extremely powerful. You could also consider headhunting key leading managers and franchise directors if needed.
Make sure when you’re hunting for a master franchisee you translate your documents to the local market – and I don’t just mean in terms of language alone.
Also carefully consider cultural differences, buying behaviour and different demographics to make sure you stay on the right path and find the right person to run the business in the right way.
Be mindful of the fact that local legal matters/requirements will almost certainly be different too – this can be an expensive and difficult slippery slope, so invest the time and effort in getting it right from the start.
ABOUT THE AUTHOR
Carl Reader is the UK’s #1 champion for small businesses. He is a highly successful entrepreneur and businessman, heading up d&t chartered accountants, a multi-award winning, medium sized accountancy firm supporting thousands of businesses across the UK. His mission is to demystify the business world and give straightforward advice to help those looking to start or grow a business. Carl lives by the ethos of ’rolling your sleeves up and take action” and is the author of The Startup Coach and The Franchising Handbook, both published by Hodder. www.carlreader.com