When home markets seem saturated or unstable, many franchisors turn to international development to continue growing. This decades-old practice has proven effective; we all know of the impressive expansion from players like McDonald’s, Subway, or Century 21 – and smaller ones, too. Just think of L’Occitane en Provence, or Bodystreet.
Successful international expansion requires enthusiasm for diversity as well as detailed preparation and smart management: defining a long-term strategy based on market knowledge and adequate resources, selecting the most promising markets, the right business model, and local partners. International business isn’t an easy task.
Fortunately, much advice can be found on how to get started abroad, and how to select your future master franchisee – the international expansion model we’ll focus on here.
This selection is so important, because the master franchisee will represent your brand in one or several markets. Still an independent entrepreneur, he or she will aim for suitable business growth and act as a ‘local franchisor’ on your behalf – including recruitment, training, and the management of sub-franchisees.
While there is much advice for preparation and launch, there seems to be less support available for franchisors in managing ongoing, cross-border relationships with master franchisees.
“Managing a successful long-term relationship with your international master franchisees is crucial, because this person ensures you convey a consistent brand image in a foreign market”
Managing a successful long-term relationship with your international master franchisees is crucial, because this person ensures you convey a consistent brand image in a foreign market.
Signing a contract does not suffice
A fruitful relationship with your master franchisee must be a dialogue; a long-term cooperation that produces positive business results and personal enrichment. Franchisors will undoubtedly discover that different business approaches can produce valuable input for brand development and innovation.
Although the importance of this key relationship seems obvious, it’s often neglected by franchisors. Some believe a connection will develop naturally over time. Others handle the relationship like that of any other local business, underestimating the cultural differences. Others simply don’t invest the necessary resources.
Three challenges of the master franchisee relationship
1) Geographical distance
You can’t just drop in, and calls or video conferences cannot replace personal contact. Your partner may also work in a different timezone, limiting exchanges to a few hours per day.
2) Different cultural footprint and mother tongue
Highly underestimated, cultural differences are a key reason for international business failure, conflicts, and missed opportunities – not only in franchising. If you are not used to international cooperation, what may seem obvious to you might be perceived as strange or annoying by your partner.
Take your view of time and relationships, for example. Do you think ‘time is money’, and always get straight to the point? Do you consider opulent dinners, including members of your master franchisee’s family, a waste of time? Or, are you surprised by your master franchisee’s ‘rude’ tone of communication, or that they don’t respect your company’s hierarchy?
Difficulties may also appear when your partner wants to adapt certain features of your franchise concept; be it promotional policy, offers, or decoration. What could easily be interpreted as ‘doing their own thing’, might simply reflect local consumer habits and expectations.
It can’t be stressed enough that successful international franchising doesn’t only require knowledge of local legislation, competition, economy, or risk. Cultural aspects are crucial, and support from intercultural experts can enable future growth.
3) You cannot manage your master franchisee directly, like an employee
To lead effectively, you must find the right balance between insisting on ‘must-haves’, and giving autonomy. Especially when you can’t provide an integrated, cross-border IT system or central suppliers, you must be flexible while still keeping control.
With different cultural frameworks, it’s clear that communication, delegation, and management don’t have the same meaning for everyone.
Fostering a longlasting relationship
Based on vast experience in international business relations, here are six tips on how to install effective and pleasant relationships with your international master franchisees:
• Show interest: Learn as much as possible about the specific market to become an expert and real sparring partner. You’ll be able to make informed decisions; be curious about how your partner works, and their culture
• Be respectful: Try to understand and discuss the differences you note. Adapt your behavior style and if necessary, as far as acceptable. For example, don’t organize annual meetings on national holidays, or call you partner by their first name if doing so is uncommon
• Establish regular, transparent communication: Do so from both sides to facilitate planning, projects, and information flow – even when things go wrong. You don’t want to learn about problems when it’s too late. Consider cultural specifics, too. For example, don’t give or expect direct feedback if this isn’t part of the local culture. Install regular contact by phone or videoconference, but especially face-to-face during market visits. Ask for suggestions and listen carefully; this can be precious input for development and innovation, even in your home market
• Offer support: Ensure you have sufficient, dedicated resources to deliver efficient support. Go the extra mile by solving logistical issues and providing specific market research. Enable your partner to succeed and to save face – for the benefit of all
• Install trust and loyalty: Over time, you’ll get to know and appreciate each other. Plan activities outside of the office if appropriate, to strengthen bonds. Aim to have each other’s back, and have pleasant and solid relationships in place when challenges appear
• Control: Despite your need for a trustful, balanced partnership, remember to regularly monitor your master franchisee’s activites and results. Agree on clear plans and reporting to stay aligned, and adjust if needed. Even if you had a great start, stay attentive and present.
The author
Kerstin Leibold is the founder of Paris-based Klarica Conseil International, and specializes in consultancy for international B2C strategy, multichannel business expansion, and cross-border management, in four languages
