International franchising can be an excellent option for those who want to become franchisors or franchisees. Established franchisors have been making franchises available internationally for over 30 years, to the point where it is a major American export industry, typically by country or region. Usually, some legal relationship with local owners is required, and the laws vary widely from place to place. As domestic markets become cluttered, with limited room for growth, international franchising presents an opportunity to increase sales and profits for U.S. franchise operations.
International franchises vary with respect to consistency of products and services relative to the United States-based franchisor. Just as there are regional variations on the menus of domestic restaurant franchises, products and services may be adapted to suit customers in international markets. Foreign consumers may want to purchase food from McDonald’s, but they expect to see traditional American fare along with products specifically created for their palates and in accordance with local custom. Franchisors often offer products and services that are identical with their flagship brand offerings, in addition to those tailored to consumers in a given market.
You may not want to establish a new venture or a franchise in an international location; rather, you may find significant value in creating a branch abroad for an existing business. Whether you establish such a facility to more efficiently and effectively serve customers in a specified geographic area or to produce goods or components more cost-effectively, international operations can present significant opportunities. For many entrepreneurial ventures, establishing a foreign sales office or production facility may be frustrating, too expensive, and overly complex. In countries with weak infrastructure or corrupt bureaucracies, the process can be difficult to navigate, even with assistance. At the same time, if you plan to grow in the global marketplace, locating a physical office or plant in a target market can be lucrative.
The initial impetus for locating a sales office or plant abroad is often cost savings. This can be because costs in the United States are prohibitive and those in the other country are significantly lower, or because an established international customer base warrants a sales office, distribution center, or production center close to the customers. Establishing such an operation should be a strategic decision, based on a realistic assessment of the costs and benefits of locating abroad. It is important to fully understand the business and political environment before moving forward, so that the full potential can be realized. Know more about franchising at the London School of Business and Finance.