Transcript for Episode 22- Setting up a franchise abroad

If you want to export to another country, one route to market is to become a franchisor. So let’s look to see if it’s right for you.

As a franchisor, you'll be allowing another person, known as a franchisee, to use your business name and process. And sell goods and services to specifications set by you. Or sell on goods that they have purchased from you.

The franchisee usually pays a fee at the start and ongoing royalties.and gets ongoing support from the franchisor.

Franchise benefits

The main benefit is that you can make money with less investment and risk. And it allows a faster launch in some international markets.

Franchise challenges

However, that needs to be weighed up against potentially high initial costs. For example, in legal fees. And it can mean lower earnings than direct exports.

You will not have direct control over the franchisee either. But keep in mind, that like you, they’ll want it to work financially too.

Is it right for you?

To identify whether a franchise is right for your business first of all make sure your product, services and process are well defined and well structured. Then decide how much you can support the franchise with training and promotions, for example. Work out the return, compared to with whether you worked out of the country yourself. Ask a franchise association for advice. Get legal advise. And make sure your intellectual property is protected in the target market.

Setting up a franchise model

Things to consider when setting up a franchise model will include deciding initial fees for the franchise. Working out the royalty percentage on sales. Calculating the size and territory awarded to each franchise.Understanding what business experience and available finance franchisees will need.

Overall, choose a franchise option if you have an established product or service and want to expand fast. But avoid it if you do not have a strong brand, or can not support it.