Franchise Global Expansion Checklist
Oct 08, 2024
McDonald’s, 7-Eleven, Subway, Anytime Fitness, Domino’s Pizza, Hertz, Dairy Queen, Mail Boxes Etc., Century 21… What do all of these US franchise brands have in common? They are globally recognized and have operations worldwide (some even in the five continents).
Franchise global expansion is the dream of many founders. Yet, achieving this goal can be pretty challenging, as I discussed with Frank Fiume, founder of i9 Sports and host of the Emerging Franchise Brands podcast, in a past interview we had a couple of weeks ago.
Helping brands grow globally was a big part of my franchise career. While working as General Manager at a Domino’s Pizza corporate store, I saw an opportunity to take the brand to Guatemala, where I’m from. But before I could do it, someone else opened that territory.
The global path was already on my radar, so I applied for a job in the company's international division. Six weeks later, I was in Seville, Spain, opening the first Domino's in that country. That started my career in the global ranks of that brand. I opened the first store in the Dominican Republic and Argentina.
For the next 3 or 5 years, I lived in 14 countries and traveled the world helping and supporting master franchisors for that brand, learning how to start a franchise in a new country from scratch.
At some point, I was also in charge of Central America and the Caribbean for that brand. My franchise journey in the Domino’s corporate world kept going, and after many years, I decided to leave to explore new horizons. My next adventure was Popeyes, where I led the International Operations and Training division for 26 countries worldwide for that brand.
“International expansion has been your wheelhouse... What should franchise owners strongly consider before expanding internationally?” Frank asked me during our interview. The conversation was very enriching and packed with powerful tips for franchise international expansion, summarized in this blog post.
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1. Verify your brand ownership
The first thing a franchisor must verify in the countries they want to enter is if they own their brand in those territories. You need to be able to trademark your name because otherwise, you will have to change it, and the value you created in the United States will be completely gone.
I know of big brands that had to close countries because they had a trademark issue where they could not sell and had to exit the market. Don’t let that happen to you.
Take Frank’s example. He had a vision to grow internationally and trademarked his brand in 28 countries within the European Union, Australia, and Canada.
“Funny story: our trademark i9 Sports got rejected in Australia because there was another local company called iSport. So, I had to register it as i9 Athletics. The brand never expanded overseas, but if it does in the future, it would have to be named i9 Athletics”, he shared.
“Lesson learned. If you're a founder with the vision to go international, get the trademark if you can afford it. It could be a long process, but it’s money well spent. You don't know when you might be exiting and, if it happens before you grow internationally, it sure leaves some meat on the bone for the buyer when they see your brand already has trademarks in several countries”.
What he did was very smart, especially if you trademark your name in the countries where you know your brand has the strength to grow. Plus, it definitely adds value to the brand when you want to sell.
2. Do some serious research
Franchisors wanting to grow businesses outside the US must do some due diligence before entering new markets. Among other things, they should investigate:
- What it takes to do business in those countries
- Their current and future economic situation
- The state of the local franchise industry
- The supply chain opportunities and gaps
- The labor cost and laws
- The consumer’s behavior & pain points
- The competition within the industry and the market size
3. Make smart decisions
International brands can not own units in another country simply because they don’t understand how that market behaves. Giving area agreements does not work either.
The model that has worked the best, over and over again, is giving one master franchisor per country. That way, they own the brand’s rights for that territory and can sell subfranchises or develop the whole country themselves.
Another suggestion is that your franchise global expansion strategy should not start until you have fully developed this country first. Expanding locally is an excellent way of learning the strategic actions and decisions you must take to grow effectively.
I know a franchisor based out of Michigan who was expanding and decided to open a unit in Atlanta. Sadly, that franchisee failed because the product cost was 30% more than what it cost their peers in Michigan. The unit economics didn’t work for that franchisee, and the brand’s image and financials suffered because of that closure.
4. Select your business partners carefully
Just as it happens when you select your franchisees, if you want to expand globally, you really have to check on whoever those master franchisors are. Remember, you don't sell the brand; you sell just the right to duplicate it, just as it happens with the franchisee. And that needs to be 100% clear: that you own the brand, and they need to follow your standards.
Many times, people who buy master franchises have a lot of influence and money in those countries, and you can grow fast. But you can lose control very fast, too. So, you must have tremendous influence with them to protect your brand.
5. Protect the brand standards
Franchise owners may have to adapt their business model for the different cultures and economic environments. As a franchisor, you need to be clear on the core products or services you want every single one of your units to provide. You do need to tropicalize, but at the same time, you must protect the brand's integrity and defend it like a tiger.
For example, if you go to a McDonald's in New York, Texas, Florida, Brazil, or England, the Big Mac will always be the Big Mac. Customers can visit a McDonald's anywhere and find the exact same Big Mac as anywhere in the US. That's never going to change.
You have to define what can be tropicalized and what is your limit. You must also have the right to approve anything that will be adjusted. To do that, the local franchisee must fill in an exception process application, punctualizing everything they’ll do differently for your approval.
Be firm and make no exceptions when it comes to your brand standards. And remember to make sure the master franchisors respect your guidelines from the very beginning.
6. Build strong relationships
Having an international business is all about relationships. If you're going to go global, you need to educate yourself to understand and respect the different cultures, customs, and traditions of the countries you do business with, as well as learn how to build relationships with the people there.
It’s a lot of nuances. For example, in one place, you might shake hands, but in another, people will kiss you on the cheek twice. And you need to be okay with that and respect those differences.
The world of international franchising is amazing. Back in my corporate years, I lived in 14 countries, and, at one point, I oversaw the operations of many countries simultaneously. And I love it. But you do need to be able to build relationships with your franchisees. If you do that, then you can grow fast and successfully.
If you want to help your franchisees succeed, the American Franchise Academy is your best ally. Our three programs -COMMAND, LEAD, and MANAGE- teach tactical-practical knowledge, tools, processes, and resources so franchise leaders can grow their franchise businesses and achieve their expected financial results.
- If you want to learn more about these elite training programs, go to https://www.americanfranchiseacademy.com/programs
WATCH THIS PODAST INTERVIEW on YOUTUBE HERE.
