Spread your wings

If you’re looking to expand internationally, franchising could be a sound choice

If you’re looking to expand internationally, franchising could be a sound choice

If you’re looking to expand internationally, franchising could be a sound choice

‘Franchising is a more personal way of doing business,’ says Chris Irons, media manager at the British Franchise Association (BFA). ‘It allows people to buy into a tried and tested model to work together towards a common goal.’

As a franchisor, you’ll receive an initial fee from the franchisee, usually payable at the outset, together with ongoing management service fees. These are usually based on a percentage of annual turnover and agreed between yourself and the franchisee during initial negotiations, backed up by a contract. ‘It’s your responsibility to find franchisees and judge their aptitude to grow the business,’ adds Irons.

Recruiting a partner

Martin Bryne, commercial director of the VEF Group, which operates property consultancy franchises in France, says franchising has to be a two-way process.

‘It’s in your interests to provide as much support as is necessary but you also have a shared responsibility with your franchisees. This is especially important working across international borders.’

The relationship between a franchisor and a franchisee differs from that of a boss and an employee, explains Carol Chopra, executive director at the European Franchise Federation, who describes the former as more like a partnership between two entrepreneurs.

‘Unfortunately, there is a myth about franchising that suggests that if you have a good concept, you simply have to sell your idea to franchisees, get some investment from them and watch them grow your business very quickly. However, there is nothing short term about it.’

Law and order

There’s no such thing as a sure-fire success when launching a product or service abroad. ‘While franchising allows you to attempt to duplicate a model that has worked in one country, there are no guarantees and cultural differences could mean that your model is not as exportable as you’d hoped,’ warns Chopra.

This extends to navigating the regulatory maze that you may encounter if expanding your model. Without access to legal support, compliance in a country that has a legal system with which you are not familiar will become a minefield.

The VEF Group, says Bryne, goes as far as providing a French-trained language and law team to navigate franchisees through the variations in regulation. For those that don’t have those facilities to offer, support networks like the BFA offer a number of general seminars for prospective franchisors and online advice on the process.

‘Franchising is a stimulating and challenging form of business but it’s worth taking your time over to get to grips with the process. You should not look at it as a quick fix,’ concludes Chopra.

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.