Building a Successful International Franchise Program

Transcription

1 Building a Successful International Franchise Program International Franchise Association International Symposium on Franchising Global Expansion for Diversification and Growth Los Angeles, November 5, 2008 William Edwards, CFE, CEO Edwards Global Services, Inc. bedwards@edwardsglobal.com

2 Today s Presentation To build a successful international franchise program the franchisor needs to ensure it has a sound business plan, a solid blueprint for targeting expansion markets and a firm handle on the appropriate expansion vehicle to utilize as it enters international markets. This session will address these topics and provide a foundation to create a successful international program. - Organizational readiness When is it time to go international? - Identifying and evaluating target markets - Choosing the right expansion vehicle

3 Reasons To Take Your Franchise Global? Tons Of New Revenue Exotic Travel More Spare Time With Your Family Not exactly.

4 Real Reasons To Take Your Business Global Add new revenue sources Reduce dependence on one market Leverage your existing technology, know-how and intellectual property Gain a competitive edge by importing innovation

5 Keys To Going Global Successfully CEO sees International as a business growth strategy A pro-active business plan* Trademarks Strong training and support Clear concept differentiation Market and competitor research Your Intranet Identify, evaluate and sign the correct licensee * Pro-active is not choosing target countries based on Internet leads

6 A 5 Step Going Global Program: Assess, Plan and Implement (1) The Initial Assessment & Analysis Process Assess the international potential of your business Assess your US and international competition to determine your differentiation Assess the international readiness of systems, staff, training, support and marketing programs (2) The Pro-active Going International Plan Define the best international models, markets and ideal Partner profile Develop a Going International budget with training, support and marketing program requirements Create international agreements and make trademark applications Develop a proforma country financial/development model everyone has to make a good return on investment (3) Implement Initial International Process Market the concept in priority countries after market and competitor research Find, thoroughly evaluate candidates and sign license, JV, acquisition or distributorship agreements (4) Start-up Initial Operations Initial USA and in-country training of staff and build out of the initial units Refine the international plan and model based on early experience (5) Grow International Operations Add more countries and units or channels in existing countries Monitor on-going global operations and development to produce long term revenues streams

7 International Development Options Master Franchise - MOST COMMON - Franchisor grants exclusive rights for a country to one company, often with the right to sub franchise Area or Province Franchise - Franchisor grants exclusive rights for part of a country. Often used by food concepts. Might allow subfranchising Direct Franchise - Franchisor awards Franchises and directly supports their Franchisees in a country Joint Venture License - Franchisor jointly invests, owns and develops the business in a country with a local company Direct Investment - LEAST COMMON - Franchisor owns and operates all units in a country

8 International Franchising Trends Area or Province Licenses Mr. Handyman, KFC, Papa John s and Popeye s Chicken In China Large companies as multi-master Franchisees AutoGrill in Europe, Olayan in the Middle East and Duskin in Japan Direct Franchisor support of local country units - Sign-A-Rama in Australia and the UK, New Horizons in Asia No sub-franchising in a country - Build-A-Bear Workshop and many food franchises such as Baja Fresh, Carl s, Jr. and Cold Stone Creamery Joint Venture Licensing - Krispy Kreme in Australia and the UK Direct Investment - McDonald s and KFC in China, Eastern Europe and Russia

9 Key Considerations In International Franchisor Expansion less Master Franchising/ Area License Investment Direct Franchise Joint Venture (direct franchising) Direct Investment Control less Developed by Kurt Ullman

10 Factors Franchisors Should Consider When Deciding Which Countries To Enter Rule of Law Country Stability Corruption Government Involvement Intellectual Property Protection Potential to Achieve Acceptable ROI

11 GlobalVue : Doing Business In Various Countries A ranking of 1 is best, a 2.5 is good and 4 is worst

12 Example Of An EGS Client-specific GlobalVue A ranking of 1 is best, a 2.5 is good and 4 is worst

13 LITS Countries: Low ROI, High Risk

14 Steps To Acquiring A License 1) Provide us with your CV and company information 2) Sign the Confidentiality Agreement and complete the Candidate Information Document 3) Receive detailed business concept information and the master franchise terms and provide us with questions 4) Attend Discovery Day meetings at the Licensor headquarters to meet senior executives, receive the financial model and discuss developing the concept in your country 5) Sign a Letter Of Intent and make a deposit 6) Sign the Agreement and pay the initial License Fee 7) Start training at the Licensor headquarters

15 4 Keys To Global Success: Based On Hard Learned Lessons International development is a strategic business direction for a franchisor, not just a short term source of up front fees Your international business model must have clear differentiation in the market place Pick countries where you have a good chance of making a good rate of return and protecting your brand Take time to find, fully evaluate and sign the right master franchisees