Foreign currency
Paul Stafford

Member Article

Investing in a franchise from an overseas brand

Franchising as a model to expand an existing business is something that has been successfully used in the UK by many brands. The model’s structure of a local business owner, combined with the proven system, support, brand and economies of scale of the network as a whole is a powerful mix.

As a result of this, some extremely successful businesses have used franchising as a way of expanding into new markets abroad. In the UK we have seen a number of successful brands from abroad establish themselves here through franchising, including some of the biggest names on the high street. This can be very positive for the UK economy, as it means that much of the revenues generated by the franchise businesses in the UK remain in this country.

Similarly, a lot of British companies use franchising when expanding into foreign markets, even though they don’t necessarily use the model within these shores (Debenhams being a good example of a UK business which has been very successful using franchising for many of its overseas outlets).

When looking at taking on a franchise from an overseas-based business, as with all franchises you need to do your research on the company, the market and your own capabilities. However, if the franchise that you are looking at is very new to the UK, it is advisable to spend even more time on this step. Interviews and meetings with the franchisor are a part of the process with any franchise, so if you are dealing with a business coming over from abroad you need to know if you will be dealing with the business directly from their home country or a master franchisee, based in the UK.

The differences that this may mean to you could be significant. For example, if you are dealing direct you need to be secure in your mind about how they will support you from the home country, how easy it is to meet with them prior to and during the operation of the franchise and of course, are there any language barriers. You will also need to be sure that they have fully understood the UK market in terms of the culture, laws and demand for the service.

You may find that you have an opportunity to look at becoming a master franchisee, which means you will be acting as the company’s franchisor for a defined area – possibly the UK in its entirety. Again you will need to fully understand the commitments, structure, timescales and costs; I’ll be examining this kind of arrangement more closely next time around.

Do make sure you check the brand’s standing in their own country – if they are operating from another country, it is worth looking to see if they are a member of their home country’s franchise association. If you are dealing with a master franchisee or a franchisor in the UK you would want them to have bfa membership.

As you look at these different opportunities you may see a business that could give you the platform to change your life and give you a whole new challenge and outlook.

You can find out a lot more about the different franchise associations abroad and franchising essentials via the bfa’s website: www.thebfa.org.

This was posted in Bdaily's Members' News section by Paul Stafford .

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