The Franchise Industry (Part 5)
In many cases, the fastest route to market for your product is through franchising. International markets like China and India have specific criteria and rules of conduct regarding the rights to business ownership within the country. In order for your business to override these obstacles, it may be most effective and beneficial to franchise your business in these markets.
Franchising offers clear guidelines as to who owns the business and what rights each party is entitled to. The franchisee takes ownership of the business as it is bought under their name and the franchisor is able to take a margin of the franchisee’s profit. Going via this method, there are hardly any litigation hurdles for an established company therefore more time is spent on building and developing a lucrative business as opposed to time wasted on constant trading regulation hassles.
Many national, well known brands have initially started out by using the franchise model in order to reach international markets. Once you have placed your business in a major niche amongst building market trends, your company is more likely to take up a large percentage of the market share before similar companies begin fighting for your spot.
Aside from the USA, the new major markets have become China and more recently, India. China could easily take over the global market in a decade’s time. For the UK, franchising is the best option to enter global markets and is cost effective. The level of financial risk is also reduced as it becomes easier to test emerging trends.
If, your business becomes successful within the market place, it makes sense to invest more money and resources into building brand awareness in order for you to take higher profits and sustain long term income.
Places like China and India are extremely diverse, which is the key for earning potential as many residents do not speak the same language and the extreme divide of wealth in certain areas within these countries varies enormously. This means tastes and interests differ in different sections of society enabling huge buying power to cater to niche markets. Where money is spent is a direct reflection of the range of belief systems across the country.
The safest option is to calculate and evaluate your business proposition in a global arena before directly targeting it. The most strategic way to do this is to use the franchise model as this way the market can be tested and your product can be altered to fit local demand. Through franchising, you are able to analyse what works and what does not and implement the necessary functions into the infrastructure of your business model.
You can still opt for trading independently once you have franchised your business in a few locations. Once you are confident in your business and it has established its place in the market, you can set up your own territories independently. It is in your company’s best interest to understand that market trends are changing rapidly as buying power is starting to lie in the hands of Asian consumers. Europe and USA now have the chance to enter and grow in expanding international markets that are set to compete directly with western economies.
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