An expert’s guide to finding and recruiting franchise partners in Europe

An expert’s guide to finding and recruiting franchise partners in Europe

Whether you’re set on your brand expanding to Europe or are simply hashing out growth plans, a trip to the Global Franchise Forum could prove invaluable. Here, Brian Duckett details the event, as well as the process behind recruiting the perfect international franchisee

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More than 10 years ago, after several years operating in international markets to help their clients find master franchises, a small group of European franchise brokers and consultants got together to form Franchise Pool International (FPI). Just two of the founding companies remain, Franchise Pool from Germany and The Franchising Centre from the UK, but the network has grown to include more than 20 member companies representing some 30 markets around Europe.

The brainchild of Rolf Kirst, founder of the original Franchise Pool business in Germany, the idea was to foster cooperation, share best practice and facilitate the transfer of brands between European countries. Since then, brands from as far afield as Australia and the U.S. have also used FPI members to introduce their franchises to the European market, often starting in the U.K. because of the common language, then moving onwards onto the mainland.

The FPI process requires that a brand’s international franchising offer is either checked or prepared by an FPI-member company before being referred on to other countries. As Farrah Rose, director of international development at The Franchising Centre, explains: “We and our broker partners have often been retained by serious investors in our respective countries to help them find well-prepared businesses from overseas. These people may be existing franchisors looking to acquire another system; they may be franchise executives who are ready to create their own networks; they may simply be business people looking to invest in a system and employ an experienced franchising team to run it for them.

“Whoever they are, they know what a good franchise looks like and they want to be introduced to opportunities that are proven in their home markets; that have researched the markets they want to go to; and that have prepared appropriate marketing, legal and operational documentation. We cannot risk showing them under-prepared businesses as our reputation will be shot and they won’t take our calls when we want to show them another one!”

The Global Franchise Forum
Some eight years ago a regular meeting of the FPI group brainstormed some ideas for changing the way master franchises were passed between members and, eventually, the Global Franchise Forum came together. The identified need was for well- prepared brands and receptive brokers to devote time to learning about each other and to have the opportunity to decide whether they wanted to work with each other. Would the brand work in a particular market and did the brand’s owners want to be there? It was decided that the best way to accomplish this was to get everyone out of their offices to an attractive city and a top-class hotel where they could spend two days hearing about each other, socializing in special places and having one-to- one meetings where appropriate.

The first such forum was held in Venice since when it has become an annual event, changing venues every year to so far include Vienna, Malta, Sitges, Hamburg, Oslo, Prague, Bucharest and Rotterdam. At the 2019 event, nearly 20 international brands presented their master franchise opportunities to an audience of FPI-member consultants and brokers who between them cover 28 European markets.

Brand presentations are by invitation only and invited systems will need to have been assessed for their international expansion readiness by one of the FPI members who will review and adapt the franchise offer package and presentations. The latter usually include a short video and are ideally presented by a senior executive from each of the systems, not only because they can answer all the questions, but because they can demonstrate true passion for their opportunity.

“A good franchisor will want to be convinced that the chosen partner has as many of the necessary resources for success as possible”

Presentations from the brands are interspersed with sessions from the brokers introducing the economies and franchising environments of their respective markets, as well as providing master-class sessions on all aspects of international franchising. There is also an opportunity for brands which are not yet ready to present themselves to attend as observers, so they can learn from both franchisors and brokers, perhaps then being ready to present at the following year’s event.

The educational content was stressed by one of the attendees. “It’s incredibly important that franchisors who are considering going international come to these events to really learn best practice”, they said — and those views were echoed by a potential future presenter who said, “Today I have seen several organisations from many countries presenting their brands and we’ve learned a lot from them about presenting ourselves. You can be much better prepared if you attend such an event.”

It was the experience of the consulting team that most impressed an experienced international franchisor who said: “I’m extremely impressed with their knowledge and it gives me the confidence to approach countries where their culture and language is so different. To be able to access a master franchisee who will be the right person for us is why I joined with this group — I would highly recommend it. I would strongly recommend contacting Franchise Pool International as it’s not easy to find masters. You need people who know what’s going on in their country.”

Two other delegates commented: “It was a good opportunity to be here for two days and meet people from nearly everywhere in Europe” and “Even though you think you know how many countries you can get to, there are always more!”

On the last afternoon, each country takes a table where individual discussions take place between brokers and brands to see who wants to work with each other and the recruitment process begins.

The destination market consultant will trawl their database of qualified investors who have registered to be approached when a suitable opportunity becomes available. Should that database not turn up the ideal prospect then a bespoke marketing plan using magazines, exhibitions, websites and other suitable media will be established.

Sometimes, an executive recruitment service can help to team up serious investors with an ambitious franchise development manager in order to create the “dream team” to develop the new master franchise operation. After all, a good franchisor will want to be convinced that the chosen partner has as many of the necessary resources for success as possible.

Getting recruitment right
Whatever the source of an enquiry, it is more likely to move through the recruitment process if it is professionally followed-up and there is a clear process of stages through which it must pass. Needless to say, the process will work far better if it is being handled by a broker in the target country who can operate in the native language of the potential buyer and to their local time. Both sides should be looking for positive mutual commitment to building a sound business over many years, and this will involve working together with a common-sense approach to financing, training and support.

The franchisor needs to show evidence of a policy decision to embark on, and properly resource, an international development programme; the potential franchisee needs to demonstrate that they are adequately funded and skilled to develop business in their country. Both sides should have input to detailed market research on the product or service as well as considering the potential differences in key ratios such as property costs, wage rates or petrol prices.

They should also build in some franchising research: how does the franchising market for potential franchisees differ between the countries, and is the proposed fee structure and rate of franchisee roll- out realistic? What about the costs of franchisee recruitment, or local laws and cultural differences that may affect the operation?

“The franchisor will need to be pretty well sold on the candidate to devote the required amount of time and personal resource to the visit”

The candidate will also want to know about the franchisor’s track record. If the home market is a country that requires pre-contract disclosure for domestic operations then they should be given a copy of the relevant disclosure document and contact details for other international franchisees should also be provided as a matter of course.

Before even despatching marketing materials, qualifying the potential franchisee can start with simple telephone screening to decide whether there is a good match based on the profiling criteria established before the recruitment project starts. After that, further telephone or personal meetings, establishing that appropriate finance and experience exists, lead up to the all-important Discovery Day at the franchisor’s office in their home country.

By the time the candidate gets to this stage they will need to be pretty well sold on the opportunity because it is obviously a serious commitment to make such a trip. Similarly, the franchisor will need to be pretty well sold on the candidate to devote the required amount of time and personal resource to the visit. It would be difficult to achieve such commitment without the involvement of a mutually-trusted third party.

After the Discovery Day, when the candidate returns to their home country, the local consultant can help to keep the impetus going by obtaining feedback from, and providing it to, both parties as to how things went and what outstanding issues need to be resolved. Assistance with development of the roll-out plan and obtaining working capital finance from local banks is an added benefit at this stage, as is access to qualified legal support to deal with negotiation of the agreement.

Of course, a franchisor can do all, or most of, the above themselves if they have enough experienced staff and plenty of resources. However, this is rarely the case, and the added complication of time differences makes it worse. Having a reliable third party who understands franchising and can nurse both parties through the process can be invaluable.

ABOUT THE AUTHOR
Brian Duckett is chairman of The Franchising Centre. He can be contacted at brian@thefranchisingcentre.com

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