Establishing a wholly-owned business in your target market
What are your options?
There are two clear options here, you can either decide to set up company-owned units replicating your UK model, or you can decide to offer franchises directly from your UK company to franchisees in your target market. If you already operate as a franchise in the UK this latter option is more easily achieved as you will already have much of the franchising strategy and the operating systems already developed.
What are the advantages of wholly owning your international business?
- You retain total control of the operation and benefit from all the income and profit that accrues from it.
- You retain the right to ‘hire and fire’ your employees.
- You decide where and when you are going to open further outlets.
There are, however, potential disadvantages in this format.
- In the same way that you benefit from all the income and profit from the business, you also risk the considerable capital investment that you will need to make to establish the business if the business fails or falters
- You will need to develop a management team who can communicate effectively with your employees, perhaps in a foreign language and probably from a different cultural and legislative background. The issues potentially created by this should not be underestimated. For example:
- Employment legislation can be much more protective of employees’ rights in some European countries than it is in the UK
- If repatriating funds into the UK is affected by local legislation (or custom!) you may have difficulty in benefiting from the profits made abroad.