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Exporting overseas takes planning, say Franchize Consultants
According to the latest Survey of Franchising, around 16 percent of New Zealand franchises are currently franchising overseas. That’s impressive – but not as impressive as the fact that another 48 percent are planning to expand overseas in the next two years.
Of course, some of these franchises are dreaming but many will at least start the process. Overseas markets are attractive to local businesses, and countries like Australia, the UK and the USA are often perceived to represent huge, untapped potential.
‘Entering these and other markets is an exciting prospect, but it also presents a complex set of challenges and financial hurdles that require addressing in a methodical and structured way,’ says Dr Callum Floyd of multi-award-winning specialists Franchize Consultants. ‘These include determining:
• Your operation’s readiness for export;
• Which country to enter first;
• An appropriate international entry plan, including franchising form and commercial structure;
• The feasibility and efficacy of entry; and
• The necessary infrastructure to support international growth.
Callum says that a key first step is an assessment of export readiness – having an established record of success and the ability to invest financially and divert key people to the project. ‘Typically, you’ll invest more than even your most cautious estimates, while it’s a reality that many NZ franchisors have needed to practically relocate for a period during the early establishment phase.’
Once the company decides on the target country, it then needs to determine the feasibility and efficacy of entry. This requires considering the business’s operation and structure in the target country, market and unit potential, appropriate franchise structures and financial analysis.
‘There is always more than one way to enter a foreign market, so this planning phase has to be very detailed to produce the right outcome,’ warns Callum. ‘Some companies pull out after this stage, as it’s often determined that the potential rewards are lower and the effort required is greater than originally envisioned. But it’s better to realise this before you start – many New Zealand companies have found it out the hard way, by skipping the planning stage, spending millions and finally exiting with only a sad war story to show for it.’
For companies that do decide to take the next step, further planning is required to put in place the infrastructure needed to a) promote the franchise, b) induct, train and support franchisees, and c) lead and manage the franchise network within the foreign market. Examples of developments include unit and sometimes master franchise agreements, associated operating and training manuals, recruitment documentation, planning and development tools, communication and support plans, and so on.
‘Expanding overseas takes courage, commitment and cash but, above all, it takes preparation and planning,’ Callum concludes. ‘At Franchize Consultants, we can help you evaluate your export readiness and create workable strategies. If you’re one of the 48 percent, talk to us now.’
See this advertorial on page 20 of Franchise New Zealand magazine Year 26 Issue 3
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