Finding International Franchise Partners

Having been involved with the search for master franchisees for many years, the first point to make is that finding an overseas partner is not where the international franchising process starts! In the unlikely event that your business is considering international development because “everyone else is doing it, and it seems like a good idea” then I urge you to do some serious research to ensure you know what you are getting into.

For the purposes of this article I will assume that any company wanting to franchise its system into other countries has taken appropriate professional advice into how to structure its international franchise package, how to build its international support infrastructure, how to decide which countries should be its prime targets, and how to build the profile of the individual or organisation that would make an ideal partner in each market.

If we have the above, we can now get on to how we generate and process enquiries from suitably qualified candidates.

With so many years of practical experience of helping businesses move into the UK and Europe, typically from the USA and Australia, and also to move between various EU and Middle East countries, the most appropriate way to do this is to explain how it’s done within our own business. To cut a long story short, it will be a much easier, and much more successful, process if you engage with a network of professionals who know their local markets, than it will if you try to do it all yourself.

Businesses which come to us looking for a master franchisee in the UK and Ireland (and often then onwards into the rest of Europe) are either referred to us by their advisors in their home country, or they contact us directly because of our reputation. In either case we ask for details of the package and plan, as outlined above, and some information about what research they have carried out into the market for their product or service in the target market. All that information is reviewed, totally free of charge, and we then feedback comment as to whether any of the documentation needs to be improved, or adapted, in order to fit better with the requirements of the destination market. Should the franchisor need any help with “closing the gaps” then we will advise how that can best be achieved.

Once the franchisor and ourselves are confident that a marketable package has been produced then a marketing plan and budget to promote the opportunity is devised by ourselves, and managed by us on the franchisor’s behalf. All enquiries are directed through our office, not least because candidates initially prefer to be dealing with people in their own country, and an agreed screening process (more of which later) commences.

So where will the marketing be placed? The answer to that, of course, varies from franchisor to franchisor and depends very much on the profile of the candidate we are looking for. Sometimes the target could simply be any individual with enough money and business experience ; sometimes it will need to be an existing corporation with a synergistic operation – particularly for an add-on opportunity ; sometimes it will be an existing franchisor, or master franchisee, who is looking to add another system to its stable. Sometimes it could be any or all of the above!

The inexperienced will say the answer to where to promote is obvious. Place plenty of advertising in traditional franchising media and websites, and attend the relevant franchise exhibitions. While these avenues may indeed be part of the marketing mix for a particular system, experience suggests they should not be the sole, nor are they likely even to be the best, sources of enquiries - and this is where local knowledge of the market comes into play.

Many potential master franchisees do not know they are potential master franchisees! Existing franchisors may not realise they could take on another system. Experienced business people, or existing corporations, may not realise they could grow their businesses by developing someone else’s successful concept. All these potentially exciting candidates will not be reading the franchising press, nor will they be attending franchise shows, so they will not see the opportunities promoted there. They need to be reached some other way.

One of the ways we do this in the UK is to provide generic articles for the general business and investor press, and make presentations to investor groups and individuals who are outside the franchising community, extolling the virtues of becoming a master franchisee. We also run generic advertising in the national business press - sometimes supported by specific advertising for a specific client.

The outcome of these activities is that we are able to build a database of known investors, together with details of their business experience, the sectors in which they are interested, and the amount of money they have available. Members of this database therefore become prime targets for appropriate incoming systems and can be directly approached when a suitable opportunity becomes available. Because they already know us, they tend to listen to the details of an offer because they are not just being marketed to “out of the blue”, and we will only approach them with something likely to be of interest.

A recent development of the database system has been to invite pre-qualified potential investors to “Master Franchising in the 21st Century” events, which happen twice a year in London and Dublin. With the support of various law firms and banks, the sessions start with some general educational sessions about master franchising in general, but these are followed by presentations of up to six non-competing systems, typically from the US or Australia, who are actively seeking master franchisees here. These presentations are ideally done by a senior executive from each of the systems, not only because they can answer all the questions but because they can demonstrate true passion for their opportunity. Meeting rooms are made available for post-seminar meetings should individuals want to know more from a particular franchisor at that time.

Sometimes, through the executive recruitment service which is a separate part of our organisation, we have been able to team up serious investors (“the money”) with an ambitious franchise development manager (“the man”) in order to create the “dream team” to develop the new master franchise operation. After all, a good franchisor will want to be convinced that the chosen partner has as many of the necessary resources for success as possible.

Whatever the source of an enquiry, it is more likely to move through the recruitment process if it is professionally followed-up and there is a clear process of stages through which it must pass. This can start with simple telephone screening to decide whether there is a potential match, based on the profiling criteria established before the recruitment project starts, through despatching marketing materials, following up with further telephone or personal meetings, establishing that appropriate finance and experience exists, all leading up to the all-important Discovery Day at the franchisor’s office in their home country. By the time the candidate gets to this stage they will need to be pretty well sold on the opportunity because it is obviously a serious commitment to make such a trip. Similarly the franchisor will need to be pretty well sold on the candidate to devote the required amount of time and personal resource to the visit. It would be difficult to achieve such commitment without the involvement of a mutually-trusted third party.

After the Discovery Day, when the candidate returns to their home country, the local consultant can help to keep the impetus going by obtaining feedback from, and providing it to, both parties as to how things went and what outstanding issues need to be resolved. Assistance with development of the roll-out plan and obtaining working capital finance from local banks is an added benefit at this stage, as is access to qualified legal support to deal with negotiation of the agreement.

Of course a franchisor can do all, or most of, the above themselves if they have enough experienced staff and plenty of resources, but this is rarely the case and the added complication of time differences makes it worse. Having a third party, who understands franchising, to nurse both parties through the process can be invaluable.

One final advantage to be considered, certainly for any business planning to find a successful master franchisee in the UK, is the availability of ongoing support for the master, particularly at times when it is impractical for the franchisor to make as many country visits, or even provide as much telephone support, as they would like. The Franchise Training Centre and The Franchise Support Centre are able to provide such services, including marketing the franchise and recruiting unit franchisees. For the latter they would likely be directly engaged by the master franchisee, but they can also act as an outsourced monitoring and support service for the franchisor.

Until such time as your international franchising operation can afford its own in-house team of experienced operators it may make good sense to outsource the whole lead generation, enquiry processing and subsequent support services to others.