International franchising is the merging of assets and skills to achieve worldwide marketing, distribution, and sales objective. It is structured with a centralized franchisor as well as franchisees in various regions of the world. By paying the management fee and an agreed-upon percentage of total sales, the franchisor provides the franchisees the right to utilize the business’s intellectual property, name, and brand. This is a profitable business since it enables a firm to capitalize on the possibilities of the international market while also allowing individuals to be their own bosses. Starting a new franchise necessitates a significant investment; nevertheless, the rewards outweigh the initial outlay.
America has one of the most franchise brands in the world. McDonald’s, Subway, Baskin-Robbins, and Domino’s Pizza are among these companies (Daszkowski, 2019). The majority of these franchises are in the food industry. The organizations have stringent standards that must be fulfilled in order to join them. To be incorporated in the franchise, a Macdonald’s shareholder must have a net value of at least $1.5 million, whereas Subway requires a capital value ranging from $116,600 to $263,150. (Daszkowski, 2019). In addition, some other brands require a royalty charge, that is always a percentage of overall revenues, and Subway Franchise demands 8%. (Daszkowski, 2019). Despite these hefty start-up fees, franchising is lucrative.
Most people mind where a product is made while buying them. American brands’ power index made America be number four of 70 countries assed in 2017 (Daszkowski, 2019). This is a positive sign showing that around the world, products from America were considered highly. Moreover, it is a boost to American brands as this gives them a high chance of their products and services being considered by consumers around the world.
Domino’s Pizza Franchise brand is very friendly to new investors compared to other brands. They require a license fee of $25,000 to start up a new investment (Daszkowski, 2019). This fee can be lowered up to as low as $0, depending on the social segment. It can also be reduced if the investor works with the franchise as a general manager (Daszkowski, 2019). Furthermore, the company offers a complete training program that covers retail operations, promotion, financing, and human resources. Daszkowski (2019). These friendly guidelines would come in hand for a new investor, making the brand highly considerable.
The United Kingdom provides a great market potential for a franchise brand. It provides a large market size due to its large urban population. The market is still growing, meaning more aggressive sales are expected for a brand. Since the population is mainly urban, the brand is dealing with food and has a high purchasing power for food. The United Kingdom is a very stable country regarding political stability and low economic risk; thus, investing there would have low chances of investment failing due to political issues. The United Kingdom would be the most suitable country to finance a franchise company internationally.
However, United Kingdom has few issues that may negatively impact the investment. The looming Brexit is making the citizens uncertain of the future of the country’s economy. This makes the citizens fear spending much money on buying products and services, which reduces the purchasing power of the population. This can have a significant effect on new investors seeking to make good sales, thus reducing the United Kingdom’s attractiveness.
In conclusion, international franchising is a lucrative step that a company can exploit the current global market. It requires a hefty investment to start but brings in good sales. The start-up cost differs across international franchises in that an individual’s financial status will dictate the type of business they can invest in. Different characteristics of a country affect the attractiveness of a country for franchising.
References
Daszkowski, D. (2019). Here is a list of the most popular food franchises and opening costs. The balance small business. Web.