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Buying Into a Foreign Master Franchise Agreement Considered

When I first franchised my business model, I was reluctant to think about franchising outside the US where I started. Eventually however, I had foreign buyers and entities contacting me from around the world asking to franchise my concept. Folks from the Middle East, Asia, African Continent, Europe, and all over South America which of course sounded exciting and a little terrifying – although the world travel write-offs did pique my curiosity I must say. Still, I wondered how could I ensure success of a master franchisee on another continent – in a country where no one had ever heard of our brand name or business model. Was it really that good, so good that people familiar with my idea believed it could work there too?

It’s amazing the thoughts that go through your head as a franchisor – should I continue franchising in the US where things are known, and although franchise law is complex, it is a known quantity – or should I push the unknown and go global. My answer later was; do both, but do it carefully and only when it makes sense, which is what I ended up doing.

Flash forward 15-years to today; I read a rather interesting article in the December issue of Global Franchise – Master, Regional and International Franchise Magazine. The article; “14 Questions a Master Franchisee MUST Ask” noted two very important issues; “Does the brand have recognition in my country and what would be the barriers to establishing brand strength?” and stated; “Brand strength and recognition is one of the pillars of a healthy franchise system. It would be prudent for a master franchisee to perform due diligence into whether an emerging or less-established franchise concept which may be successful in one country would make sense and find success in the master franchisee’s territory.”

Indeed, here the author re-asks the exact question I had asked of myself. In fact, the first country I sold a master franchise agreement in, I probably sold too cheap, merely because my brand name had probably never been spoken in that country until the day I sold the master franchise, and I doubt the reason wasn’t only the language barrier. The master franchise buyer in this case got a super good deal, but had to develop the brand name all over again, we even had to modify the logo because it was in English. We agreed to do this – and for me it was an experiment, for my master buyer it was a risk but a chance to bring a revolutionary concept to his great nation, like I had mine. Please consider all this when franchising internationally.

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