about international franchisees, the ideal international granchisees, ifa - international franchise association information.

International Franchisees

The Ideal International Franchisees

The franchising relationship is often likened to a marriage. This comparison is heightened in the international franchise relationship, where a lengthy courting and engagement period normally precedes the ultimate “marriage”. Some franchisors and franchisees are even asking for test period arrangements, of say, one or two years, before the final franchise agreement is signed.

The procedures can be painstaking because the stakes are big in international franchising. The franchise relationship, as we noted in the previous chapter, is usually that of a franchisor and a master franchisee. The territory that is licensed to the master franchisee is not a zip code area or a portion of a state, instead, the licensed area is quite often an entire country or a large portion of one.

In general terms, these are the qualities and requirements the franchisor will be looking for in a master franchisee:

• The master franchisee should know the local market. This includes the culture, real estate opportunities, suppliers, financial institutions and relevant laws and regulations.
Ideally, the franchisee will have experience in the industry or business that is being franchised. In lieu of this, knowledge of and successful experience in a general business area are usually acceptable.
• Proven financial resources are a necessity. The master franchisee must have the wherewithal (either alone or most commonly with other investors) to buy the franchise rights, set up prototypes and systems and develop the concept in the agreed upon territory.
• Proven management skills are another necessity. For the most part, the master franchisee will be functioning just as the franchise system does in its native country. That requires management skills in such areas as sales and marketing, training and operations.
• The master franchisee should be enthusiastic and convinced about the feasibility of the franchisor’s concept and system. Wanting to “do it your way” is a red flag to the franchisor.
• The franchisor looks for a certain “chemistry” in its master franchisee, which can be defined in part as integrity and a co-operative attitude.

Where to Find the best International Franchise Opportunities

Finding the right franchise when you are a native of, say, Hong Kong or Brazil and would like to operate a U.S. franchise in your country is a little more difficult. You can start your search by checking out FranchiseHelp’s International franchise directory for opportunities in your country; or contact us (link to form) for more specific consulting needs.

Types of International Franchising

Although most franchise systems prefer a master franchise set-up for their international expansion, other forms of agreements are sometimes chosen. These formats include the single-unit franchise, the area development agreement or a joint venture agreement.

Master Franchise. In this arrangement, the master franchisee (also called the “sub-franchisor”) is granted a franchise for all or part of a target country. The master franchisee, which may be an individual, a group or a company, has the right to develop the entire territory or sub-franchise the units to third parties (sub-franchisees).

The franchisor trains the master franchisee. In turn, the master franchisee recruits and trains sub-franchisees to operate individual units of the franchise in their country. In effect, the master franchisee is now the franchisor in that country and receives a portion of the royalties for its support of individual franchises.

Area Development Franchise. Similar to a master franchise agreement, a person, group or company gains the right to develop an entire country or part of it. However, unlike the master franchise, the focus is on running the business, not selling franchises. Substantial capital and management resources are necessary for the area developer, since there will be no sub-franchisees to share the risks and capital requirements.

Single-Unit Franchise. U.S. franchises rarely sanction a single unit outside the country with the possible exceptions of Canada and Mexico (because of their proximity). In this case, a franchisee obtains the rights to open a unit of the franchise in her or his native country. Franchisor steer away from this type of arrangement because of the great costs sustained in servicing one unit outside the country.

Joint Ventures. Two parties, the franchisor and the sub-franchisor, make contributions to the investment in this arrangement. The parties negotiate their ownership shares and decide how to finance their contributions. The franchisors often contribute expertise, a system and sometimes cash. The foreign partners may contribute money and local knowledge. In essence, the joint venture company becomes the sub-franchisor.

Franchise systems will usually not consider a joint venture arrangement, which puts their own capital at risk, unless the country is one they want to enter and they can’t do it any other way. This is most common in Eastern European countries, where the markets are promising, but potential franchisees do not have the capital to totally fund the investment.

Checklist for Choosing an International Franchise Business

The following are the basic questions you should be able to answer getting down to serious negotiations with a franchisor.

Preliminary

• Is there any regulation of foreign investments in your target country? Find out the details.
• Are there any local laws and restrictions which would prohibit certain types of franchises?
• Are there any import restrictions or laws governing the kinds of products or services which you can source from outside the country?

More Specific

• Is there already an established demand for the franchise product or service? (It is very risky and expensive to try and create a demand where one does not already exist.)
• Does the franchise have at least minimal name recognition? (The franchisor should have at least 25 outlets in a concentrated area.)
• Is the franchise system financially strong and stable? (Companies looking for a quick buck will fail. The franchisor must commit to a longer pay-out period for international franchise.)
• Is the system and the mind set of the franchise management flexible? (Often a part of the system has to be changed for a foreign market.)
• Does the business have unique features that will give it an edge over the competition?
• Are suppliers of the components, ingredients, equipment, or other needs of the business readily available?
• Is the franchise trademark registered and protected in the target country?

Financing the Project

Financing your international franchise investment, just like a domestic one, will be a challenge. And, since we’re talking in terms of developing an entire country market, the numbers will be much larger and the time spent in putting together the financial package will be considerable. Usually a consortium or a group of individuals invests in a master franchise or area development agreement. It is rare that an individual will be able to finance and develop an international investment alone. continue to know full description ......

Franchisees need standards: IFA - International Franchise Association

MAUI, Hawaii -- The best innovation comes from franchisees rather than from franchisors, but some uniformity must be enforced in the midst of individuality, a three-person panel of franchisors emphasized at the 26th annual International Franchise Association (IFA) convention at the Hyatt Regency here late last month.

Some 800 franchisor executives, including 140 from 12 foreign countries, attended. Almost half of the 800 had some food-service affiliation, indicating the dramatic growth of food-service franchising.

"We certainly get the best input from franchisees in the field," declared Dunkin' Donuts chairman Robert Rosenberg, 1970 IFA president. "Thank goodness that we don't have complete uniformity and franchisees can do their own innovative things."

Jim Peterson, Whataburger president and moderator of the strategic planning panel, predicted "a philosophical change to flexibility in the field where we can tap into those franchisees who know more than we do about product innovation." He advocated "some continued rigidity on standards and uniformity in a chain, blended with the ability to set a climate for innovation."

E. Jan Hartmann, president of the diversified Ziebart International Corp. of Sweden, suggested that franchisor involvement should be "from the bottom up" with a franchisee advisory council playing a major role.

Rosenberg told how Dunkin' Donuts has developed a complete computer model "to see the future financial impact in a wide range of categories of any of some hundred possibilities both on the economic outlook and with our strategic plans." He recalled a vital strategic planning decision of more than a decade ago to cut back from six missions to just one--"to be the best doughnut chain"--and to sharply reduce expansion for several years to achieve "better earnings and a better balance sheet ratio."

(Dunkin' Donuts has since restored its expansion pace to more than 100 new units annually and now has added a second mission, for its new franchisee Dunkin' Ventures subsidiary to develop Chili's as the best in its segment in the Northeast and Canada.)

Peterson emphasized the combined role of strategic planning and "being resourceful enough to know the guts of your business and be able to run the store completely on your own in the field if you have to."

William Rosenberg, Robert's father, who founded Dunkin' Donuts and was IFA president in 1962, chimed in from the audience with a series of pertinent observations seemingly opposed to strategic planning: "The most important factor is the team spirit and enthusiasm that permeates the organization" and "the name of our company came from a long brainstorming session rather than any kind of strategic planning."

In another panel, "how to master the public spotlight," participants agreed there should be a designated spokesman, rather than "any executive available," to deal with the press. "We're very sensitive about what goes into the press," said Jerrico public affaris senior vice president Bruce Cotton, IFA program chairman and 1983 president. "We have some 17,000 employees, and rather than let any of them answer media questions, we simply have all questions referred to a designated spokesman."

Ron Smith, editor of Entrepreneur magazine, told franchisors that "an Excedrin-type" story of an industrial accident or negative news cannot be avoided and suggested cooperating with reporters "in order to get a better story in the long run."

"One of the great things you can do is have friends in high places in the media," suggested Jerry Wilkerson, president of Franchise Recruiters Ltd. and a former network television correspondent and IFA communications director. "In any TV interview, you should emphasize the great strength of franchising and its positive aspects."

Smith conducted a mock interview of Wilkerson in which the questions asked and the answers elicited were deliberately too vague and unspecific. "Give very specific answers that can't be misinterpreted" was their advice.

Irl Marshall, president of Duraclean International, moved up from first vice president to 1986 IFA president, succeeding James Trethewey, Sheraton Corp. senior vice president.

Source from: findarticles.com

Rainbow International®Franchisees Begin Cleanup After Hurricane Isabel

WACO, TX - (September 25, 2003) - Rainbow International®Restoration and Cleaning franchises along the East Coast are beginning the cleanup one week after Hurricane Isabel reached land and became one of the 10 costliest hurricanes in U.S. history.

Water loss and disaster related claims are expected to exceed $1 billion, according to the Associated Press. And while several areas are still hazardous, electricity is slowly being restored to various communities that Rainbow International serves.

The winds proved as damaging as the flooding, according to David Kifer, owner of Rainbow International in Virginia Beach. Kifer business, which is less than one mile from the beach, had a series of disaster plans in place to deal with the possible flooding of the business, itself, as well as to help his customers. Luckily, flooding bypassed his shop, which is fully operational to help those who were hit the hardest.

Larry Owens, owner of Rainbow International in Wilmington, N.C., said the hurricane created three new inlets in the outer banks of his region. While several areas are still unstable to visit, Owens has begun surveying the area as much as 3 hours away from his shop to begin helping wherever possible. Owens even purchased the entire inventory of air movers and dehumidifiers from Worldwide Supply at the company corporate headquarters in Texas to have on hand for the emergency.

Perhaps the hardest hit area in Rainbow network was around Frank Ballinger Rainbow franchise in Herndon, Va., which serves Fairfax County and its heavy commuter population outside of Washington D.C. Ballinger company is booked with water damage restoration calls for the next few days. Much of the damage came from recent heavy rainstorms that fell on an already saturated ground.

Franchisees are doing an outstanding job in responding wherever they can, said David Bethea, president of Rainbow International.

Rainbow International provides training for its franchisees and their technicians through the Institute of Inspection & Restoration Certification (IICRC). The IICRC training is respected nationwide as some of the best restoration training in the industry, Bethea said.

When searching for a water damage restoration company, Rainbow International advises consumers to look for the following:

• Companies that are certified in IICRC water damage restoration.
• Technicians who are familiar with IICRC S500, the industry standards for drying out structures.
• Companies that are properly equipped with air movers, dehumidifiers and moisture detecting equipment.
• Companies that understand the differences in types of water damage, especially in the case of flood waters, which usually require removal and replacement of materials due to unknown contents of the water. Continue to know more news ......

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