Changes in political and economic patterns have an enormous impact on some industries. In a challenging time with margins becoming thinner and sales falling, some sectors choose to open new units though multi-unit franchising or joint ventures. To maximize profits while avoiding risks, international franchise business with credible operators can be an excellent choice.
Investigate the market and select your franchisor carefully
Undoubtedly global markets are continuing to integrate. The World Wide Web and social media platforms provide even more powerful tools for businessmen to reach various franchise opportunities. In such cases where more choices sometimes mean more tricks, selecting a high-quality franchisor is more critical than ever before. A valuable brand may not be trendy but must be able to withstand the test of the market, as well as peer pressure. An appropriate franchisor can help you avoid many of the mistakes which new and independent start-ups tend to make. XIMIVOGUE, for example, with an average monthly growth rate of 80–100 stores, has opened more than 1,400 stores around the world in three years and its revenue topped2 billion RMB in 2017. Such franchise brands bring valuable marketing experience and rich profits to their storeowners.
What can go wrong when finding a franchisor？
It should be noted to distinguish false or objectionable information of the franchise brands. Not all franchise companies are big, well-known businesses. Although information under due diligence exercise is obtained by the prospective franchisor, it is likely to take place in the context of wider commercial discussions. Since some franchisors will exaggerate in order to expand rapidly, the franchisees should carefully identify and make judgments based on actual data.
A lack of knowledge of international terms could easily derail a deal. After selecting a franchisor, it comes to the negotiation and signing process. As with domestic franchise, international franchises also need a full due diligence exercise to avoid disastrous consequences caused by wrong decision. It’s necessary to have a clear understanding of documents like the franchise agreement for breach and be informed of the procedures. Otherwise, if the contract was enforced or terminated, the consequence it leads to may be severe. Franchisees should be well prepared and aware of relevant policies before making the deal.
Three Ways to reduce risks
- Choose a franchisor with multinational cooperation experience.
It is essential to know franchisors about its expertise and cooperators, which can start from the official website of the operator. Take one of the best designer brands as an example. XIMIVOGUE, a Korea-based designer brand that is a fast fashion department franchised store, is the promoter of global “Green consumer products”. With its core brand edges of vogue and low prices, XIMIVOGUE earns love from consumers all over the world. It sets the trend of personalized green consumption in the frontier market of household consumption and opens up the business model of wholesale retail franchised outlet. The multinational experience can reduce the risk of violations in franchise cooperation due to the ignorance of local laws.
- Stay in touch with franchisor and other franchised store owner.
Franchised storeowners can communicate with other storeowners by participating in the franchise owners association. Comply with the manual and maintain standards. Similar specific obligations appropriate to an area development agreement will also be required. Complaints promptly when a dispute arises. If there are any particular concerns over enforceability, it may be wise to have the draft reviewed by local counsel, particularly regarding the duration of any restrictions.
- There are some other details to understand before entering into an international franchise.
For example, it will start an international franchise if there is sympathy between the franchisor and local culture. And it will be more convenient if a local market knowledge and contacts are available. The storeowner should also conduct properly throughout the due diligence process and negotiations.
Cross-border franchising holds great promise. Yet at the same time, the costs involved in corporate expansion, and the risks associated with beginning new operations in another country can be significant. Not only geographical remoteness from existing supply chains and support systems but multilingual and cultural differences should be considered. Balancing the need for growth with the need to mitigate some of these corporate risks often leads businesses that have not previously been franchised to consider whether franchising can give them the opportunity they are looking for. The answer in many cases is “yes, it can.”
For more info, Please visit https://www.ximiso.com