Creating an effective support program for overseas franchisees is an essential element of your move overseas, says Dave Hood
If you speak with most franchisors who are franchising internationally, they will likely tell you that developing international markets has taken longer and has been more expensive than they had originally planned. For many U.S. franchisors, international franchisees may also not perform at the same level as their U.S. counterparts.
While these challenges could exist for many different reasons, one of the main failings of many U.S. franchisors is the inability to support international franchisees at a high level.
The ability to provide proper support begins with the right international development strategy
Proper support of international franchisees is much easier if your strategy is designed to optimize performance of the brand within the countries being developed. In particular, there are four key areas where the right strategy will facilitate the support process:
Don’t franchise internationally ahead of your capability to support franchisees. Before a franchisor expands outside the U.S., it should have experience and sound processes in place for supporting franchisees at a distance within the domestic market. Experience in training and supporting multi-unit franchisees domestically is also an essential building block for international support.
International inquiries
Expand where your franchisees are most likely to succeed. Instead of being reactive to international inquiries, focus your development on markets where you’ve done your research, and feel the culture and economy will create the best environment for franchisee success.
Build a regional development strategy. International support will be far more challenging and expensive if you’ve spread out your franchisees around the globe. Instead, focus your development on regions where multiple countries suitable for developing your brand exist.
Selecting the right international franchisees is imperative. Your international franchisees will bear much greater responsibility for the ultimate success of your brand than individual franchisees do in the U.S. market. Supporting them effectively will be easier if they have the experience, contacts and financial resources needed to establish and scale your brand in their local country.
Award the right types of franchises in each market. Give careful thought as to the types of franchises (e.g., masters versus area development) you should award, and whether or not each country you develop should be awarded to one or more franchisees. Right-sizing these decisions to optimize franchisee performance and brand penetration will again facilitate the process of supporting your franchisees.
Your onboarding support will lay the foundation for long-term franchisee success
Because your international franchisees will be the flagbearer of your brand within their country, they will likely be investing heavily in creating the building blocks for growth.
In order for them to be making the right decisions, and for you to ensure they’re on the right track, it’s necessary for you to spend the time and resources needed to understand the franchisee’s market, and what challenges and obstacles they will face growing the brand.
It’s also vital during the onboarding process that you and your team focus on building trust and credibility with your franchisee, so that they see you’re committed to a mutually beneficial long-term relationship. This is one aspect of international franchising that many U.S. companies fall short of.
Hopefully you visited the franchisee’s country as part of your due diligence before you awarded the franchise.
There will likely be a need for one or more visits in the months following the signing of the international agreement in order to complete additional market research, identify and qualify potential local vendors your franchisee will use, tour potential locations for the franchisee to develop, or undertake consumer research to identify adaptations in the business model that may be appropriate for the franchisee’s country.
Approve locations
If your franchisee will be buying or renting space for their business, you will ideally be able to time your visit(s) so you can physically see and approve the first several locations they wish to develop.
In many cases, an international franchisee candidate will be required to present a business plan to the U.S. franchisor as part of the qualification process.
Assuming this was done, the financial projections included in the candidate’s plan will need to be revisited in order to create a first-year budget to support the franchisee’s early-stage operations. This budget is something that you and your team should assist the franchisee to create.
Training of international franchisees typically takes place in two phases. The first step is to identify who from the franchisee’s team should come to the U.S. for training in your culture and operations. If the franchisee will not be engaged in day-to-day operations of the franchise, most franchisors will require either an operating partner (i.e. with equity in the franchised business) or a designated brand champion to serve as their primary point of contact with the staff of the U.S. franchisor.
This brand champion is often approved along with the franchise owner, before an international agreement has been signed. They would attend the entire training program in the U.S. along with other important members of the franchisee’s staff.
Training program
If the majority owner of the franchise will not be involved in day-to-day operations, they should at least attend an abbreviated version of your training program so that they can establish a base knowledge of your brand, your operations, and the responsibilities their team will have for operating the business in their country.
The second phase of training typically takes place within the franchisee’s country surrounding the opening of their initial location(s). Onsite training for a new international market is typically much more intensive than what you would provide to a domestic franchisee. Depending on the industry in which you operate, you may be sending multiple staff members with expertise in construction, operations training and business support. In many countries, a formal grand opening is much more important than in the U.S., so your support for any grand opening event should also be discussed with the franchisee well in advance of their initial opening.
Proper ongoing support will help ensure long-term success in the market
A common complaint from many international franchisees of U.S. brands is that the franchisor’s support efforts dropped off after the initial locations were developed. In order to avoid this from happening, it’s important that you establish an international support team within your organization that is responsible for maintaining frequent communication and franchisee support. For a franchisor new to international franchising, this may involve designating one team member within each department to be the primary point-of-contact with your franchisees outside the U.S. Everyone on the support team should know what specific tasks they need to execute on with your international franchise owners.
If you’ve worked with your international franchisee to build a first-year budget and operations plan, that document should serve as your guidepost for monthly and quarterly assessments of their progress to plan. If the franchisee is falling short of desired results in any area, the sooner the issue is addressed the better.
Much like an effective domestic support program, your support of international franchisees should focus on helping them to grow revenues, control costs and maximize profits. While compliance with brand standards and meeting development schedules are also important, your international franchisees need to see that your first priority is helping them succeed in the business.
Every international franchisee will bring different strengths to the relationship with you. Because the operation of your business and consumer acceptance will also vary by country, your support programs should always be tailored somewhat to the needs of each franchisee.
ABOUT THE AUTHOR
Dave Hood, Phd, is President of The iFranchise Group, the largest and most experienced consulting organization in the U.S. supporting the needs of emerging and established franchisors, as well as dealer and license organizations. Based in suburban Chicago, the iFranchise Group also has offices in Toronto, Dubai, Riyadh, Dallas, Los Angeles, Miami-Fort Lauderdale and Atlanta. www.ifranchisegroup.com
