Serious considerations need to be given to determine whether or not your brand is ready to expand internationally. Developing an international recruitment strategy, along with how you’ll structure your franchise model abroad and the fee structure involved is crucial to determining your readiness.
Before looking abroad, you will need to ensure your domestic model is ticking and humming and will pass the validation test from potential international franchisees. That’s step one. Deciding where to expand and choosing markets that make sense for your brand is second, as well as preparing your system for international growth operationally. These steps are critical prior to actively recruiting candidates.
Like ‘putting the cart before the horse’ there is no point spending time and money on preparing for international growth if you don’t have a pool of potential franchisees to work with. At RainTree, we believe that there is a way to generate demand for international franchisees by utilizing the existing domestic lead generation budget.
Your brand is ready to expand internationally when you have a strategy in place utilizing your franchise recruitment website, franchise portals and franchise brokers. To generate quality leads, you also need to have a targeted PR, marketing and advertising plan.
IS YOUR FRANCHISE RECRUITMENT SITE READY?
The franchise recruitment website is central to your plan of international franchisee recruitment. Any quality franchise site will have enough content for users to be able to develop a solid understanding of the franchise model and franchise opportunity. Today’s candidates conduct intense research on a brand before they connect with a sales rep. The more they can learn on your own site, the better.
A franchise opportunity blog, separate from your consumer brand blog, is preferable as it allows for dedicated posts featuring successful franchisees, thought leadership pieces from the franchisor and other pieces focusing on market demand for your product and service.
Many franchise brands out there subscribe to the ‘just whet their appetite’ notion for their franchise site. This approach involves only a very limited amount of content available for the user, with a strong push for them to speak to a sales representative to gain the information they are looking for. This will not bode well for international visitors to your site.
Rather, sites that provide significant, robust and often interactive content perform the best in terms of appealing to candidates at various stages of the franchise sales funnel. These sites typically allow an immediate download of a franchise report that includes a section on international franchise availabilities.
Some other best practices include the addition of keywords that speak to international visitors into the overall SEO strategy, and an addition to the FAQ section of the site that specifies the willingness of the franchise to offer franchises internationally.
MAXIMIZE FRANCHISE PORTALS
If you are willing to ensure you have a thorough content marketing strategy to compliment advertising on these sites, you will see success. This also applies to the international realm.
Part of the strategy of portals is utilizing them as a vehicle to generate awareness of the franchise opportunity. The more an international franchise prospect intersects with your brand on these sites as they go about their research, the more likely you are to pique their interest enough for them to start to research your brand in particular – specifically, for them to deviate to your franchise recruitment site, whereby they have the opportunity to become a franchise lead. Again, this can be achieved without adding any additional spend to the current domestic franchise budget. The majority of the RainTree franchise brands work extensively with the franchise portals and we continue to find great success with them.
USE PRINT MEDIA & PR TO SPREAD THE WORD
Beefing up your franchise recruitment site and the franchise portals with compelling content about your international opportunities are important aspects of an overall international recruitment plan. But driving leads to your site and to the portals often requires an additional spend on PR and advertising. Knowing your international franchise candidate’s persona, we encourage brands to craft a PR and advertising strategy that targets the right media with the right message to a keenly targeted audience.
For example, if you are seeking affluent, educated and business-savvy international franchise partners, you might consider advertising in magazines that are distributed where these types of candidates congregate, such as first class and business class airport lounges, exclusive hotels, car dealerships, etc. Many of these publications also are backed by websites and various social media platforms, ensuring the franchisor’s message is put before those with sufficient funds to invest.
Similarly, franchisors have found PR to be an effective means of attracting would-be international franchise prospects to their brands. In addition to paid media, earned media through PR, such as feature stories about successful franchisees or thought leadership pieces on relevant business topics by franchisors, offers tremendous third-party credibility to a brand and its franchise opportunity.
FRANCHISE BROKERS
Partnering with franchise brokerage firms is a great way to generate international franchise leads without having to increase your current lead generation budget. By having frequent one-on-one phone calls and webinars with brokers that include a page in your broker presentation that speaks to your international growth capabilities and desires, you can do this without spending an extra dollar on the front end.
Using some of the more pre-eminent broker groups like FranNet and FranChoice is likely to be a better use of your time. The consultants in these groups are typically very high caliber and have significant experience in awarding franchises internationally. We have found that they can even provide a good deal of assistance in helping assessing whether a particular country is viable for your growth. While the upfront costs of generating these leads is typically zero, the back-end costs can be high. We typically pay brokers 25 percent of the master franchise fee, so be sure to structure your master franchise fee accordingly.
If you’re willing to do the heavy lifting of modifying your current lead generation strategy so that your brand gains an international audience and if you have the staff to ensure you can educate the brokers you work with about your international aspirations and capabilities, then you’re ready to expand internationally. But, you must also consider what model you’ll use to grow your franchise in other countries and the fee structure.
THE MASTER FRANCHISE AGREEMENT AND FEE STRUCTURE
There are many ways you can structure your international franchise model. However, at RainTree, we have really only seen one way in which success was achieved – master franchise agreements. This model is essentially a subfranchise agreement, whereby the international franchisee is permitted to develop units and also recruit franchisees of their own at a national level. As opposed to something like the direct franchise model which would require huge infrastructure to support the individual franchise sales, the master franchise model makes supporting that country a lot more simplified and streamlined.
The most important decision you can make during this process is determining if the international candidate who is applying for the franchise is the right fit. The implications of picking the wrong candidate on an international level are far more consequential than at a domestic level.
YOU MUST DETERMINE IF THE CANDIDATE:
has the experience to help you adapt your model at the national level
is willing to follow your lead when required, while at the same time be willing to “figure it out” themselves when it’s in their best interest to do so
possesses the business acumen to be successful
has the right temperament to weather the storm that all early-adopters and market pioneers are sure to face
Supporting the master franchise owner is a bold undertaking, requiring careful consideration on how the correct support will be provided. Accordingly, you will need to create a franchise fee structure that allows for you to do this successfully. Items to consider include brokerage fees, international attorney fees, training, grand opening travel costs and possible tweaks to your product/services to meet international criteria or market demand. For a point of reference, RainTree has awarded master franchise agreements for our franchise partners with initial franchise fees ranging from $150,000 – $1 million depending on the particular brand and particular country. The average royalty structure is somewhere between 20 – 45 percent of ongoing royalties collected by the master franchisee.
You are ready to take your brand international if your support team and you have the bandwidth and time to ensure adequate initial and ongoing support for your master franchisee. You are ready to expand internationally if you have very carefully thought about and determined all the possible costs you will incur for that country before deciding upon an initial franchise fee, along with ongoing royalties for the country or the territory within the country.
KEY POINTS TO KEEP IN MIND WHEN CONSIDERING FRANCHISING INTERNATIONALLY
Utilize your franchise recruitment website, franchise portals and franchise brokers
Get your message out to a keenly targeted audience through advertising in global magazines
Use public relations to supplement your advertising strategy
Allow an immediate download of a franchise report including a section on international franchise availabilities
Ensure you have a thorough content marketing strategy to compliment advertising on portal sites
Include a page in your broker presentation that speaks to your international growth capabilities and desires for your calls and webinars with brokers
Determine if the international candidate who is applying for the franchise is the right fit
Create a franchise fee structure that allows for you to successfully expand globally
ABOUT THE AUTHOR
Brent Dowling is CEO of RainTree, a franchise development organization using creative, lead generation and growth teams to help franchise companies expand in the United States and abroad. He played an integral role in helping Doc Popcorn grow from a franchise made up of just a few units to the largest popcorn retailer in the world, and now continues to develop some of the most exciting franchises in the world. His ability to negotiate exclusive agreements with the top vendors in the franchise industry stems from his experience in international diplomacy as the youngest person to represent the country of Australia at the United Nations.
