WEBVTT - Setting up a franchise abroad

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If you want to export to another country

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one route to market is to become a franchiser

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so let's look to see if it's right for you

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As a franchiser you will be allowing another person known as a franchisee to

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use your business name and process and sell goods and services

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to specifications set by you

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or sell on goods that they have purchased from you

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the franchisee usually pays a fee at the start and ongoing royalties

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and gets ongoing support from the franchiser

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Franchise benefits

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the main benefit is that you can make money with less investment and risk

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and it allows a faster launch in some international markets

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Franchise negatives

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However that needs to be weighed up against potentially high initial costs

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For example in legal fees and lower earnings than direct export

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you won't have direct control over the franchisee either

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but keep in mind that like you they will want it to work financially too

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Is it right for you

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To identify whether a franchise is right for your business

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First of all make sure your product services and processes

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are well defined and well structured

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then decide how much you can support

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the franchise with training and promotions for example

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work out the return compared with if you operated in the country yourself

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ask a franchise association for advice

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get legal advice

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and make sure your intellectual property is protected in the target market

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Setting up a franchise model

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things to consider when setting up a franchise model 

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will include deciding initial fees for the franchise

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working out the royalty percentage on sales

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calculating the size and territory awarded to each franchise

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understanding what business experience and

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available finance franchisees will need

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overall choose a franchise option if you have an established product or service

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and want to expand fast but avoid it if you

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don't have a strong brand or can't support it