Austin TX Business Law Blog

Friday, August 3, 2018

Franchising Internationally

How can I take my franchise to an international level?

In today’s global economy, it seems natural that some successful American franchisors will want to explore the possibility of expanding their franchise overseas. The United States is home to many of the most popular brands in the world, and American franchises often find considerable success when they open stores internationally. Going global does come with challenges and risks, however, that any franchisor will want to carefully weigh before they start exploring the international market.

Select Your Country of Choice

One of your first steps towards expanding internationally will be to select a country to open in. Your choice of country will be driven by many factors, including the overall franchise climate, competitiveness, language barriers, the market for your product, political climate, and legal concerns. Ideally, you will want to target a country that has existing franchise regulations. This will ease the strain legally of opening your international franchise.

Countries that have franchising regulations include Japan, Spain, Mexico, Italy, Australia, China, France, and many other industrialized nations. You will be best off entering a country with which you are familiar with the market and its people. It can be quite difficult to enter a foreign market that is brand new to you and which you have no built in contacts.

Choose Your Franchise Structure

When you expand internationally, you will have several options as to how you structure your franchise. You could opt to do it alone. This will require that you acquire new franchisees in your country of choice. You can target franchisees in several ways, including franchise shows, print advertising, the internet, and direct mail. Just like in the U.S., it will be crucial that you choose a qualified international franchisee who will carry out the mission of your franchise.

Another option will be to find an international partner. Your partner could be located through existing contacts or the appropriate U.S. embassy, who can connect you to local partners for a modest fee. Alternatively, international trade missions have become a popular way to find qualified candidates in new countries, or you could use a dedicated broker specializing in international franchise development. No matter what business structure you use, you will need the assistance of an experienced business lawyer who will assist you in creating a strong legal foothold for your international franchise.

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