Ever heard of a franchise failing in their overseas expansion because they had too good a knowledge of their target market?
Or ever been put off investing in a brand because they simply have too many great insights about what works and what doesn’t in your region?
No, I didn’t think so.
No matter how good a franchise’s service or product, expanding overseas without the right preparation is like sailing out into unknown waters without a compass. It might get somewhere, though it’s unlikely to be where it wanted to be… or it might just flounder and sink entirely.
In our extensive experience, the single biggest differentiator that sets a franchise up for success or not is a comprehensive Market Entry Study.
Not just a decent plan with a bit of online research done to back it up. An in-depth analysis which contains insights into what will work and what won’t, and exactly how to achieve a series of clearly defined goals in any given market.
It’s the difference between a brand being able to show that it’s a proven, market-ready opportunity, or if it’s just based on hopeful thinking and guesswork.
Here are the key things you should look for in any franchise’s Market Entry Study, as a minimum:
An analysis of the local market – how other similar brands perform in the region, trends and shifts in consumer behaviour over several years, and an informed forecast of future growth potential.
Localisation of the product/service – how the brand’s offering and experience align with the target market’s consumer preferences, cultural adaptation, customer behaviour, and the potential need for localisation in product offering, tone of voice, and service and delivery.
Market Potential and Capacity – A territory-level analysis of the new market to assess how many locations could viably be developed over time, making use of mapping technology and competitor overlays to present both long- and short-term rollout strategies.
Local franchising insights – an analysis of the market’s franchising scene, covering legal frameworks, operational norms, franchisee expectations, and key success factors.
Competitor analysis – an assessment of both customer-facing competition and franchised brand propositions that may appeal to the same investor pool, taking into account differences in brand positioning, pricing, support, and growth trajectory.
Market positioning – Territorial demarcation, and understanding how to make the most of diverse regions with complex internal differences.
Financial modelling – high-level projections for franchise performance in the region, including start-up costs, EBITDA potential, and payback period assumptions.
Implementation plans – key operational considerations focusing on supplier selection, equipment cost comparisons, areas for technological enhancement, and fit-out strategy.
Support & Structure – clear strategies for how support structures will operate and how responsibilities between the franchise and their investors will be laid out.
These are just the basics of preparation, of course. From these foundations, there also needs to be a clear roadmap in place to present the franchise as a viable investment, and a longer-term strategy for development. Not to mention all the nitty-gritty – but just as essential – details of trade mark and IP registration, navigating the legalities of imports, different franchising related laws, price fixing, restrictions on repatriation of funds, branding and brand development, competition laws… phew! The list goes on!
A good Market Entry Study isn’t a small document – ours typically run to about 80 pages! It needs to be based on solid information and insight of the kind which can only be gained through in-depth research and contact with experts on the ground.
Whether you’re a franchise brand looking at international expansion, or an investor weighing up an opportunity in your region, the quality and depth of a Market Entry Study tells you everything you need to know. It shows whether a brand is serious about success, and reveals how prepared they really are to support growth in unfamiliar territory.
As always when it comes to growth, it’s about hard work, not guesswork.
If you’d like to discuss what makes for a truly robust Market Entry Study, or want some guidance on what to look for, we’re always happy to share what we’ve learned. Just click the button below to schedule a call so we can have a chat.
Farrah Rose
Head of International Franchising
