International Expansion: An alternative to going it alone…
Replicating a successful business overseas can be a real headache. There are many success stories of British businesses that have grown large international operations but the media is also littered with stories of thriving British businesses that, despite having sunk substantial time and resources into the enterprise, have failed to transplant their businesses into international markets. There are many reasons for such failures; lack of market knowledge and experience, failure to understand and deal with cultural differences, language barriers and failure to establish successful supply/distribution channels and other critical networks are often key contributors.
US businesses have grown global operations using franchising for many years and many UK businesses have followed suit. The popularity of international franchising has intensified in recent years as businesses struggle to access the funds to facilitate an international expansion programme or prefer, in view of current conditions, not to use their own funds. In some countries, particularly in the Middle East, businesses cannot be owned by foreigners and therefore franchising may be the only viable option for establishing operations in those countries.
Particularly attractive features of franchising include using other people’s resources to fund overseas expansion and having that expansion driven by businesses with a successful track-record of operations in the local market, tried and tested networks and distribution channels, an intimate understanding of the culture and language plus access to key real estate.
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