When setting up a business, the individual can set up one from scratch or select franchising. There are several advantages and disadvantages that come with being a part of a franchise. Individuals are not limited to franchises within their country but can extend their reach to international franchising depending on their circumstances. This article will discuss some of the benefits and challenges associated with international franchising.

According to the International Franchise Association (IFA) [What is a Franchise? | International Franchise Association] a franchise or franchising can be defined as a “method of distributing products or services involving a franchisor… and a franchisee. Put in another way, a franchise is where a business licenses its trade name and its operating methods to a person or group operating within a specific territory or location, which agrees to operate its business according to the terms of a contract”. As noted in the definition, the franchise agreement entails granting a license to another business (i.e., the franchisee). For more information on master franchise companies and international franchising, speak to attorneys experienced in franchise low.

There are many benefits that come with international franchising, including:

1. New markets – international franchising opens a door of opportunity to enter new markets. Therefore, it increases the business’ reach on a whole new customer base and creates increased or new brand awareness. This is primarily a good move for franchises whose domestic markets are saturated with their products or services. As a result, by undertaking international franchising, the business enters a foreign market, offering a huge opportunity to attract new customers. It might even be the case when researching where to open the international franchise that the country chosen may not have any competitors in the business’ line of work, creating a niche for the business.

2. Laws and regulation – depending on the country, there may be a significant reduction in regulatory measures imposed on your business which may ease your burden.
Challenges that arise from international franchising include:

3. Cultural barriers – While researching the demand for your products or services, it is essential to critically examine your franchise name, brand, and manner of service as to whether this appeals to your target market. For example, the KFC menu [KFC Is Most Popular Fast Food Chain in China — Here’s What It’s Like (businessinsider.com)] in China is different from any other country hence appealing to their market.

4. Then again, the legal side of operating a business in another country may also provide a significant challenge. This depends entirely on the specific factual circumstances of the location being considered.