Establishing a wholly-owned business in your target market

What are your options?

There are two clear options here, you can either decide to set up company-owned units replicating your existing business model, or you can decide to offer franchises directly from your company to franchisees in your target market. If you already operate as a franchise this latter option is more easily achieved as you’ll already have much of the franchising strategy and the operating systems already developed.

What are the advantages of wholly owning your international business?

  • You retain total control of the operation and benefit from all the income and profit that accrues from it
  • You retain the right to ‘hire and fire’ your employees
  • You decide where and when you’re going to open further outlets

There are, however, potential disadvantages in this format.

  • In the same way that you benefit from all the income and profit from the business, you also risk the considerable capital investment that you’ll need to make to establish the business if the business fails or falters
  • You’ll need to develop a management team who can communicate effectively with your employees, perhaps in a foreign language and probably from a different cultural and legislative background. The issues potentially created by this should not be underestimated. For example:
    • Employment legislation can be much more protective of employees’ rights in some European countries than it is in the US
  • If repatriating funds into the US is affected by local legislation (or custom!) you may have difficulty in benefiting from the profits made abroad.

Only you can decide whether this is the right route for you, but our International Franchise Consultancy Team, along with our overseas associates, can certainly advise you. However, you should also consider some of the alternatives.

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