Franchising - International Markets

I am taken aback by the lack of knowledge about the rest of the world by US franchisors. Sure they have made great strides recently(last 20 years), but generally speaking the level of ignorance is staggering. To compound this void, the apparent reluctance of US franchisors to educate themselves about new markets is equally mind boggling. Most franchisors choose to offer Master Franchisor contracts - sloughing off the hard set up work, risk and necessary tweaking of the concept to foreign business leaders in exchange for relinquishing a higher Royalty stream and extracting a huge upfront (dream) fee, all the while maintaining full Control of the concept. That is the business model and it works for some concepts.   

Over a decade ago, many franchisors made a major push into the international arena and opened up several markets. Some survived the initial problems and continue to get better especially in dense populations like Europe; others did not and owners ended up losing huge amounts. As one with insider knowledge of some of these entrepreneurial suicide missions I was dismayed by the lack of corporate concern, planning, research, aptitude, break even analysis, and a general attitude that said, “if you want to try it go ahead even though we know your risks are enormous and could be financially devastating and you are probably not going to make it, but thanks for the fees." In all fairness it said that in most of their international UFOC’s, but people went ahead anyway and Franchisors know this franchisee “full steam ahead”, blinders on, passionate for success mentality and ride on it just so they can plant the Franchise flag in that country as if it is one to be conquered and colonised by the great US franchise behemoths. It certainly makes headline news in the host country and sometimes at home too.

Foreign country Franchise Investor beware!   Being open in foreign countries should not impress you; being profitable, successful and properly supported in them should.