While it is difficult to answer this question in a few lines, let’s try to list some of the « bad practices » we have already encountered.
Entrusting development to an employee who has a good level of English, but no experience in international development. Some companies mistakenly think that international development is a copy/paste of what they do in France. Beyond the legal aspects, a good knowledge of the local culture is essential to accompany partners in the development of their territory.
Do not send a standard master franchise agreement without having it proofread by a local lawyer. There is no need to travel thousands of kilometers or to leave the European Union to find differences. For example: in Belgium, the DIP must be submitted 30 days before the contract is signed, compared to 21 days in France. Some networks, faced with disputes, realize in hindsight that they should not have neglected the assistance of a competent lawyer in their new market.
Being attracted by a « wealthy » investor without a real development strategy. Setting a flag outside of France does not mean developing a network abroad. Some networks hastily open units on the other side of the world without having specified to their master franchisee that failure to comply with the plan could result in the loss of the exclusive development rights acquired in the territory.
Underestimating the costs related to logistics, customs duties and import taxes. Not to mention all the travel expenses of the business developer and his teams. On the one hand, unforeseen costs may weaken the profitability of the local master franchisee. And, on the other hand, they can call into question the degree of support presented by the brand when signing the letter of intent.
Carry out a theoretical market study based on the presence of direct competitors. In the restaurant industry, for example, some chains use the Big Mac index – which measures the purchasing power parity from one country to another – as a basis for calculating the future sales price. They also have to compare the forecasts from their spreadsheets with a count in the field. This business model building stage sometimes involves opening their own pilot unit in the destination country. Or, by recruiting an area developer who will have the priority to buy the master franchise in the medium term.
Considering that your Master Franchisee can take care of itself is often the cause of disputes. Although the Master Franchisee is the master of its area, the network head has an obligation to assist this investor who pays him royalties accordingly. The distance should not be a good excuse to reduce the assistance due to him. As with any partner, allowing too much freedom in the application of the concept could have consequences on the final consumer, on the performance of the sub-franchisees and on the brand image of the brand.
We could easily suggest ten more practices that should be avoided. Contrary to popular belief, these observations are not just the result of common sense. Each international development project must be prepared with a specialist whose job it is. The latter will elaborate the win-win model essential to the success of your expansion beyond your borders.