Given the recent difficulties within our domestic economy, coupled with the emergence of less developed countries as the new economic stars, UK businesses have increasingly been looking overseas as an anecdote to stagnant domestic growth.
If you add to this mix the fact that the international community loves British brands, you can understand why franchising is becoming a popular way for businesses to expand internationally. In the last year the franchising team at Ashtons Legal has helped outstanding brands such as Neal’s Yard Remedies, Harry Ramsden’s and TaxAssist Accountants expand their operations into the Middle East, Far East and North America.
The rewards can be high. However, if not done correctly, overseas expansion can prove costly. Below are some of the issues you should to consider when deciding whether to expand your business internationally through franchising:
- Do you have a business system that can be replicated – a good indicator is whether you already have several branches or outlets in the UK.
- Ability to find and convert partners – although consultants, social media and UKTI are all excellent sources, a tweak or two to your existing website can produce surprising results. You must however, have a response ready that “sells the sizzle”.
- Logistics – if your network is based on the supply of particular products or materials, ensure that you are able to either supply these to, or source these within, the relevant jurisdiction.
Once you have found a suitable partner, then you must consider:
- Minimum Performance – if you have to grant exclusive rights, agree minimum performance targets your partner must achieve (for example, the number of outlets it must open or level of sales it must achieve).
- Local franchise laws – domestically we have no specific franchise laws. However, many countries have strict franchising laws, which you must adhere to. We can work with our network of overseas lawyers to ensure you do not fall foul of these.
- Trademarks – ensure that you can register your trademarks in the relevant jurisdiction. If your partner is paying for the rights to use your brand, it will want to ensure you have adequately protected it.
- Control -well drafted agreements can give you a surprising amount of control, but also look for practical controls in the way you operate.
and of course,
Take advice from professionals – franchise lawyers and consultants can provide valuable advice from the outset to maximise your brand’s potential.
If you have any questions, please contact Damian at Damian.Humphrey@ashtonslegal.co.uk
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