There are a number of methods used by franchisors setting up in a foreign country.

• Master licence
  A franchisor sells a master licence to an overseas operator. They then receive ongoing fees, usually linked to sales turnover. The main advantage is that the master franchisee will have a full understanding of local conditions. However, it is vital to get the right person as they will in effect be the franchisor in that country, both recruiting and supporting franchisees.
  
• Wholly owned
  In this case, franchisors 'go it alone' using their own resources. Problems can arise through franchisors failing to understand the issues with different legal systems and cultures. There may also be language difficulties. The franchisor does maintain full control, but it may be difficult to monitor and support franchisees at a distance.
  
• Joint ventures
  A franchisor sets up a joint venture with an overseas partner. Although overcoming some of the problems associated with a wholly owned operation, it still involves investment, both financial and in management time. It also places a high premium on finding the right partner.

We strongly recommend that you contact a specialist franchise lawyer with experience in international franchising before taking any steps to expand overseas. It can be a very costly and time-consuming experience, so it is vital to get the right advice at an early stage.

If you are looking to buy a master licence from overseas, and bring a new concept into the UK, you will need to undertake a great deal of research to ensure that you are buying a proved and tested format that's value for money. Again, take specialist legal advice at an early stage - before signing any contract or paying a deposit.

Normally a master licence fee is payable for the right to use the name, trade mark and systems - with an ongoing fee, usually based on a percentage of network turnover. You must ensure that there is enough margin in the business to allow both the overseas master franchisor and you, as the master franchisee, to take ongoing fees - whilst still allowing your franchisees to make a profit.

Even when a well-established overseas franchise operation is brought to the UK, it needs to be piloted in this country before launching. Many overseas franchisors have found that the UK market is different from their home territories, especially where retailing is involved.

Let us help

• Our Franchise Unit can introduce you to lawyers specialising in international franchising, who are also affiliate members of the British Franchise Association
• We can give you details of overseas franchise associations
• There are various overseas franchise exhibitions and fairs which may be of interest/use to you. Details are available from the British Franchise Association
• If you are considering franchising overseas, we can offer you access to one of the many offices in the countries and territories where we have representation, offering a full range of international services.

Important Notice for Franchising