Picking the right time to take your franchise to international heights is vital, says Tipton Shonkwiler
When growing your franchise brand, some of the most challenging tasks can be not only finding your target demographic and evaluating competitors, but all of the regulations and laws surrounding franchise licenses as well. These hurdles can be more easily researched and conquered when expanding in your backyard, but venturing overseas is a whole new ballpark. How do you take into account different laws, customs, foods and interests, all while still maintaining a cohesive brand image?
Despite these challenges, international franchising has many benefits that outweigh any extra efforts. By taking your franchise international, you can reduce your dependence on US demand and focus on growing new revenue and profit centers across the globe. Expanding into foreign markets requires minimal investment and offers great potential for scaling capabilities.
In this article, we will discuss how to find the right country for expansion, how to localize your franchise, and the benefits of having master franchise partners.
Finding the right country for your business
When getting started with international franchising, companies need to do their due diligence and evaluate which countries make the most sense for their brand. For example, if you are an in-home care franchise, expanding into Asian countries may not make sense due to their vastly different views on senior care.
When we first began expanding Venture X internationally, we started in countries similar in culture to the United States such as Canada and Australia. This strategy is a great way to ease your way into international development and use this as a ‘test’ for more diverse markets. “Plus, we understood the way people work and how companies operate is changing across the globe,” said Jason Anderson, Venture X brand president. “With the rise of coworking spaces, traditional office space won’t exist in 10-15 years and this is a trend we are seeing on a global scale.”
One of the first things you should research is the economy and regulations of the market. Look for stable economies that are in position for growth. You should also ensure the market has business-friendly policies in regards to helping business startups. A market with too many regulations can slow down your growth and be startup prohibitive. Additionally, you will want to ensure the market is one where you can establish the needed foundation for building your franchise, such as having needed vendors and suppliers.
Some of the best research you can do is visiting the country yourself to evaluate these different criteria. Make a trip to your desired market to get a feel for the culture, talk to local business owners and see what other brands exist and are doing well in the area. This will also allow you the opportunity to determine who, if any, in the market is doing something similar to the service your business provides. This will help you make the final decision on whether or not you should expand into said market.
Localizing your franchise
One of the biggest struggles between a franchisor and franchisee can be how much freedom is granted in localizing your brand. In international development, this is a key area to focus on – all while retaining a cohesive feel to your US locations. Certain brands have done this exceedingly well. For example, McDonald’s has taken its successful international menu items back home to the United States to connect its restaurant globally and create mutually-successful partnerships.
In every market we expand in for Venture X, we look to adapt some aspects to the local community to be more culturally accepting. We like to call it “tropicalizing” to the local market. This includes adapting to various cultural terms – the United States calls us ‘coworking’ while the United Kingdom may call us ‘flexible workspaces.’ This can also include adding elements or products to our brand offering such as interior décor items from the region, or local food selections and snacks for our members.
Allowing your international franchisees to have this room to adapt is key. You want to bring your unique service to new communities, while still making the population feel at home and show you’ve done your research into their wants and needs. One of the best ways you can master this skill is by working with master franchise partners.
Mastering the master franchise partner
When expanding into international markets, you may worry about your new overseas locations and how everything will remain managed when it’s not easy to physically check-in. This is where master franchise partners come in. A master franchise partner is typically a native of whatever country you are developing in and will have a better understanding of the political and legal business landscape.
Foreign master franchisees normally will acquire a large, geographic area and sometimes even an entire country. This allows them to act as a sub-franchisor of your company, where on top of opening their own franchise locations, they will then sell franchises to other entrepreneurs in the territory, collect royalties, train new franchisees and oversee all additional matters. This system allows the master franchisee to focus on working in the country and handling day-to-day operations, all while you focus on your brand’s higher-level growth strategy.
To ensure the brand is staying connected across the globe, make sure to check in with your master franchise partners on a regular basis through your support services and visit their operations whenever you can. This will allow you to still have a pulse on the brand and make sure that even while localized, you are properly positioning the brand image in your new country.
ABOUT THE AUTHOR
Tipton Shonkwiler is the international director and executive VP for UFG. He has been with United Franchise Group for the past 17 years serving in multiple capacities, including leading UFG brands, along with sales and operations. As international director, Tipton is responsible for the overall global growth and expansion for UFG brands, especially Venture X. Tipton is a Certified Franchise Executive within the International Franchise Association, he has 25 years of franchising experience and holds a Franchise MBA from Nova Southeastern University.