Franchising can ease the investment into a market with entry barriers. There can be different kind of barriers to enter the market, such as specific legal requirements, real estate development, licence and permits, local labour and tax regulations:
When to franchise?
To have a successful franchising, a company needs a differentiated concept with investable propositions that might work in multiple countries. It is also advised to have a dedicated team responsible for the franchising development. The company needs to have a vision for the development of the brand with a specific strategic plan.
Ideally, the company would need to reach a critical mass in the home country (about 15-20 units) to be ready for franchising. It is recommend to have a concept that works with multiple locations (high street, malls etc..) and different asset types (kiosks, full stores).
Where to franchise?
Franchising development should focus on selected countries where the brand is believed to work best.It is more advisable a development “by cluster” rather than “planting flags”. This will allow to:
– optimise support structure
– ensure better operations control
– optimise supply chain
– gradually build the brand
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