Increase in UK government support of export by franchising could benefit industry

A new report by the University of East Anglia and supported by Franchise Development Services Ltd (FDS) has discovered that in countries such as the USA, Canada, Singapore and Malaysia government support provides a welcomed boost to exporting franchises around the world.

Many companies from around the world, but particularly here in the United Kingdom, still do not recognise one of their greatest export assets. It is not just the products and services that can be exported. It is the know-how, the sum total of the sales and marketing, research and development behind the products and services, which can be sold as an added value via international franchising. This view has long been supported by Professor Roy Seaman, CFE, Managing Director of FDS which is one of the world's leading franchise development organisations. Professor Seaman goes on to explain that the Master Franchise Rights technique involves an individual organisation, the originating brand owner – the Master Franchisor – granting to an established organisation or group of individuals the Master Franchise Rights (MFR).

The MFR are for the exclusive marketing of an established product or service under a given brand in an exclusive territory for a specific period of time in exchange for an initial license (the franchise fee) and either supply line profits or a management services fee. In the 30 years of its existence, FDS has assisted over 1,000 companies with their national and international franchise development and helped more than 10,000 people to own and operate a franchise. FDS' knowledge and awareness of franchising is, therefore, unquestionable. Professor Seaman firmly believes that this is the marketing formula for business success in the future and that as more and more companies wake up to the value of their international franchise and licencing rights a much faster and more profitable method of exporting goods and services will unfold.

Some British companies such as Mothercare and Laura Ashley do not offer franchises in the UK market, but have adopted the franchising model for their international expansion. Likewise brands that are household names are now embracing export by franchising. These include Burberry, Marks & Spencer, Tesco and many more are likely to emerge as we move through the Olympic year. With millions of business minded people visiting the United Kingdom they will be looking for brands, particularly in the retail sector, that have not as yet been exported. This will place even more awareness on the owners of British companies to consider the franchise option.

As franchising at both national and international levels becomes an important part of board room thinking, the search will be on for the most experienced franchise consultants and franchise lawyers that can help to package together an offer that will serve its purpose and ensure success for both parties. Gone are the days when companies can appoint agents or distributors and allow them to endeavour to represent them in today's fast moving markets. By offering international franchise rights from day one the owners of the Master Franchise have the opportunity to immediately implement strategies that will ensure consumer demands and utilise state of the art technology. The best example of this is the EPOS monitoring of all sales points worldwide so that back at the headquarters the companies will know on a daily basis what is selling and organise tomorrow's shipments to meet the known demand.

When the opportunity of expansion by franchising is first received in the minds of owners of successful businesses, those frequently have a feeling of utopia, since they have found a new way to package together all of their knowledge, ability and the values associated to their products and services for mutual benefit. The fact that Master Franchise Owners are willing to pay for the privilege of representing the brand in their country and injecting genuine enthusiasm is one of the many keys to success. The US government first recognised the value of supporting successful US franchisors some 25 years ago and today they continue to proudly lead the government support initiatives to help successful US businesses expand around the world by franchising. Brands like McDonald's are continually held up as a perfect example of successful national and international franchising with over 35,000 locations now established worldwide. Similarly brands like Burger King, KFC, Hilton Hotels, Hertz, Avis and more recently Subway are prime examples of how franchising can stretch across many business sectors.

To FDS 2012 is seen an Olympic year for franchising since the whole of the United Kingdom is a shop window for business, as well as for winning gold in the athletics arena. We are already receiving enquiries from British companies that have never previously looked at franchising as an expansion option. Should the UK government pick up some of the recommendations of this latest study, then there are huge benefits to the UK economy as international investors seek to take home with them golden opportunities. These in turn will help the British economy for many years to come as franchising continues to grow provided that it receives from the originating franchisor continual research, development and assistance to maximise the business opportunity. There is without doubt a correlation between government initiative taken and the relative performance of their business sectors. The UK government can quickly learn the strategies to follow and the respective results by simply looking at the US, Singapore and Malaysia. The UK franchise industry is still very much in the growth phase of its life cycle and can play an ever more significant role in the UK economy at both national and international levels in the years to come. The UK government needs to develop initiatives to support the industry in order to achieve its full growth potential. A collaborative effort is called for on the part of the stakeholders, namely the UK government, the franchisors, the franchise owners, the UK banks, franchise consultants, lawyers, accountants and trade associations. Then, as we have seen in other international franchise markets, franchising can grow and prosper for many years to come.