Franchise systems are among the most popular investment forms in recent years. Numerous companies have successfully established themselves within the most diverse sectors internationally, from the hotel business to real estate franchise. With the goal of increasing the brand's sales and opening up new markets, franchisors often plan to export their own franchise concept abroad or even start a global franchising strategy. Engel & Völkers presents the difficulties faced by the franchisors - and possible solutions - in the following article.
International franchising: Great potential with a challenging character
A franchise concept that has proven to be successful in its founding country can quickly fail elsewhere. This is due, for example, to cultural differences, deviant demographic factors or lack of purchasing power in the target country, which result in too little demand from the franchise offer. An essential prerequisite for a promising expansion of the franchise brand across the globe must therefore be a complete analysis of the target market. If necessary, the offer or the corporate identity must be adapted to the new target group. Only then should the economic viability of the modified franchise concept be tested, first with individual pilot companies.
How franchisors deal with the difficulties of globalization
To be effective in the target market, franchisors often choose to collaborate with experts who possess national culture, language and industry knowledge. Not infrequently, these are already native speakers or native professionals who are familiar with the mentality of the country. As franchisees, they are usually better off than foreign investors, as they are at an advantage because of their familiarity with the target market in corporate management, human resources management and marketing.
In this context, the concept of master franchising, in which a higher-level franchisee takes responsibility for the target market and further licensing, is one of the most popular methods in globally expanding franchising.
Engel & Völkers is a franchisor across more than 700 locations worldwide. Feel free to call or e-mail us if you have questions about real estate franchising or are interested in working as a self-employed franchisee. We look forward to you!