Various structures have been developed to aid franchisors who want to expand their brands internationally, to deal with the difficulties in managing international franchise networks.
1. Master Franchise
The most common and simplest structure for expanding a franchise internationally is by awarding Master Franchise Rights in the target country to a suitable indigenous individual or organisation known as the Master Franchisee.
Often in return for a significant investment, the Master Franchisee secures the exclusive rights to develop that country under the franchisor’s brand, trading style and system either by establishing a sub-franchised network, Master Franchisee-owned outlets or a combination of the two.
2. Regional Franchise
In larger countries e.g. the USA, one Master Franchisee may not be able to manage the entire country. The Regional Franchising structure divides the target country into regions, for example dividing the USA into states, which are treated as mini Master Franchises.
3. Area Development
The Area Development Franchising structure is where no sub-franchising takes place and the franchisee must own all new outlets opened; therefore the territory is divided, much like in Regional Franchising.
4. Direct Franchising
If the franchisor is capable of providing the support, it may opt for a Direct Franchise structure in a country, taking direct responsibility for recruiting, training and supporting a franchise network, through long-distance control from its Headoffice, a subsidiary office in the target country or an appointed agent.
If you are a franchisor looking to expand your brand internationally, which structure is your best fit?
Remember to visit www.safranchisebrands.co.za for Franchise Opportunities.