How can retailers find an overseas franchise partner?
As Laura Ashley is discovering, locating a successful overseas franchise partner takes time. By running concessions and online platforms, it is testing its brand’s suitability with an unfamiliar culture and consumers.
Michael Luckman, partner at law firm Gowling WLG, says: “Clearance checks are vital to ensure no business operates under similar brands, and early brand registration in a country is recommended. Additionally, a retailer’s charging scheme for goods or services will affect tax treatment in both countries, and tariffs and exchange control rules may impact.”
The franchise category is also important – will ‘hands-on’ or ‘hands-off’ support be needed? Support may be possible centrally but local franchisor presence may be desirable for more effective control, as a financial conduit or to demonstrate commitment.
“Selecting the right structure is crucial in achieving success,” says Luckman.
“Master franchising exists where a single master franchisee with strong business credentials and local knowledge is appointed to run the territory for a margin by finding and sub-licensing other franchisees. However, it is vital not to grant rights to any franchisee beyond its ability to exploit the market.”
“Local agents and government departments can identify regional brand advocates to offset risk”
Michael Luckman, Gowling WLG
Laura Ashley already has a significant footprint in Asia so finding a cultural as well as commercial fit for the brand is key. This requires significant trust in franchise partners.
“Local agents and government departments can identify regional brand advocates to offset risk,” says Luckman.
“However, once operational, developing a relationship with franchisees that respects the original brand must be a continual focus as this can determine success overseas.”