If you’re looking to grow your franchise internationally, there are two approaches that work well — likely even in a pandemic. You’ll want to familiarize yourself with two terms you probably already know well — area developer and master franchisee.
But first, let’s talk about current events. Obviously, many companies are growing more slowly in 2020, especially those in the restaurant industry, but for popular brands with drive-thrus and the ability to offer carryout, delivery or curbside service, the bottom line can still be profitable. COVID-19 or not, people need to eat, and people get tired of cooking meals at home.
So if you’re looking to expand internationally, you’ll probably want to focus on area developers and master franchisees rather than on individual franchisees. What do I mean, and why is that important? Well, let’s walk through this.
Defining Area Developers And Master Franchisees
The two terms are almost interchangeable, but the main difference is that the master franchisee finds individuals to purchase and run a franchise, while the area developer typically opens and operates the restaurants themselves.
You could work with either one, but generally, I’ve found area developers can hit the ground running faster than a master franchisee.
Why Area Developers And Master Franchisees Are Important For International Growth
As you can imagine — and as you know, if you have or work at a national franchise — it can take a lot of time to grow a brand when you’re working with a lot of individual franchise owners.
Granted, the bigger your brand becomes, the more individual franchisees are excited to sign up and align themselves with your company, but it still takes time. Even in the best of situations, people will open up a restaurant, and maybe a year or two after that, once they’ve mastered the business model and feel confident that they could open up a second and maybe a third, then they will do that.
Or they may just stick with the one that they have — because they don’t want to own multiple locations. They just want the one.
And that’s fine and great. But you can see how a national franchise can take time to grow.
When you’re working with international area developers and master franchisees, however, they often are focused on opening restaurants in an entire country — or several countries that border each other. Frequently, they’ll open up several at once, although — especially with a master franchisee — it may be one at a time.
Still, if nothing else, working with an international area developer or master franchisee means that suddenly, your brand becomes global. Instead of bragging rights that you’re thriving in Paris, France — which is very cool, but it’s only one city — you can talk about how well you’re doing in Italy or India.
And you almost have to work with area developers and master franchisees in another country, unless you want to set up a corporate office in each nation and work with individual franchisees. The former is more cost-effective, and regardless, you should partner with people who know the country inside and out.
It isn’t just that it’s nice to know what traffic patterns are like in a certain part of Barcelona; your area developers and master franchisees need to know about the franchise laws in each country you want your brand to be located in. And they are all different. What works in Japan may not work in Germany.
There are all sorts of random rules, sometimes onerous and sometimes not, but you’ll want to be aware of them so you don’t run afoul of the law.
How To Find Area Developers And Master Franchisees
International franchise trade shows, certainly pre-pandemic, have been one important way to make connections. Advertising in franchise publications is another. Sometimes, a little old-fashioned sleuthing on LinkedIn can do wonders.
Still, it’s generally best when they find you. I think most entrepreneurs and executives would rather work with somebody who is a fan of the product or service rather than having to convince a complete stranger that your brand is worth investing in. So to some extent, you find area developers and master franchisees by being a successful brand in your home country, and you hope that one gets wind of your business and then makes an inquiry. Trust me. It can happen.
But that also brings up another good point — you need to be ready for it to happen. This may mean working on an area developer contract or master franchisee contract with your franchise attorney before you meet your first prospective international partner. Before you rush out to find an area developer or master franchisee, you’ll do well to start thinking about how this arrangement is going to work now.
Otherwise, you’re going to have a feeling similar to being in your bathrobe and looking unkempt when a visitor appears on your front porch. In other words, opportunity will knock on the door, but you need to ready to open it.