I wish to take my franchise business overseas. What must I do before expanding? Where are the current market opportunities?

Successful international expansion of a franchise system can be rewarding and result in business growth and profits. However, this complex process does not suit every company. You should begin by ensuring that your trade marks and other intellectual property assets are protected in the countries you plan to expand into. Failure to do so, allows someone else to register your brand name, prohibiting you from using it. For example, Bakers Delight faced considerable rebranding costs in Canada after neglecting to register their trade mark.  

You should also consider your financial capacity to support international sales, your ability to adapt your system of overseas markets and the potential profit margin.  

Traditionally, Australian franchisors seeking to expand overseas have first looked to establish operations in markets with similar culture and language (New Zealand, USA, Canada and the UK) before Asia. However, recent trends suggest that franchisors are setting their sights on India and China; both are large markets which offer new opportunities and great potential for Australian companies.  

The success of Australian company Advanced Hair Studio in establishing operations in over 13 countries, including India, provides a useful example of effective international expansion, by an Australian franchise business.  

Companies seeking to enter the China or India market must consider intellectual property protection, and the most appropriate expansion route, including licensing, technology transfer, distribution agreements, joint-ventures, representative offices, or other corporate structures.  

A detailed checklist, “International Expansion – Is Your Business Ready” can be found at our website: http://www.stephens.com.au/view/20080826123621/2008090295814   

For more information on franchise expansion into China, please see:

• “Commercial Franchising in China”, at: http://www.stephens.com.au/view/40/43  
• “Doing Business in China: Developments in Intellectual Property, Tax and Labour & Employment Law” at: http://www.stephens.com.au/view/22/20100415100038 

Stephens Lawyers & Consultants can assist you with developing and implementing strategies to enable you to take your franchise overseas. We represent leading international businesses and have over 20 years' experience in international trade.