Expanding a franchise abroad opens new market opportunities to franchisors, potentially leading to increased profits and reduced dependence on domestic demand.
But if you try to move into the international scene too soon, you may quickly become overwhelmed. As a result, your domestic franchise operations could suffer.
Is now the right time for you to consider overseas expansion to franchise abroad?
How Strong Is Your Domestic Franchise Business?
Think about how your home franchise business operates. Can it run smoothly without constant direct supervision and oversight?
Expanding overseas takes an incredible amount of time and effort. To franchise abroad, you’ll need to travel to the target areas, perform market assessments, review territory specific requirements and needed system changes, and develop a solid plan to grow your franchise internationally. If your domestic business requires your constant attention, foreign expansion may have to wait.
Keep in mind that franchising overseas isn’t a solo effort.
Do you have senior employees you can assign to support your foreign operations? Does your current staff have sufficient training and skills for international sales and marketing? To be successful in the global marketplace, you must have employees who are capable of structuring and running your foreign business.
Do You Have the Capital for Overseas Franchise Expansion?
Moving into new territories — international or domestic — requires significant investment.
Due to the expenses involved, many new overseas franchises aren’t quick to turn a profit. In fact, your franchise business may lose money for a time. Do you have enough cash flow or access to financing to cover the costs of entering the global marketplace?
And can you support these costs for an extended period of time? You’ll need a long-term financial plan in place to be successful abroad.
As with any new business venture, running a cost-benefit analysis is a good idea before deciding to move ahead. Take a close look at all of the expenses involved and calculate how much profit and growth you can expect from the new foreign markets. Determine whether the benefits of expanding outweigh the costs.
If so, your franchise could be ready to go overseas.
Can Your Franchise Adapt to the Local Culture?
Not every franchise is inherently well-suited to global expansion.
Cultural and language differences can result in problems. Locals may not understand or appreciate your product or service, for example. Or worse, your brand name, trademark or logo could have a negative connotation in a foreign market.
Are you familiar with the cultural complexities of international franchise expansion? Will you need to make changes to your business model or operations before you attempt overseas operations? Conducting thorough due diligence and consulting with experts will provide you with the best chance at success.
The experienced attorneys at The Franchise & Business Law Group can assist you in developing strategies to expand into any market. Contact our offices today to schedule a consultation. We can help you evaluate your business model to determine if now is the time for you to franchise abroad.