How to Purchase an International Food Franchise

Launching a specialty restaurant or fast-food franchise overseas could be difficult, expensive, and time-consuming. In a foreign country it will be easier to open a fast-food franchise, since you will not have all the headaches associated with starting a business from scratch. Not only will the franchiser provide a plan for operating the business, but it also will furnish key management advice, tax information, and other business consulting. An international franchiser has valuable contacts providing expertise on operating a franchise abroad. More important, franchises have an already established name providing immediate recognition and have a proven fast-food concept that has already demonstrated success in the marketplace.

However, there will be some risk involved, since you might not know whether the concept you choose will be successful in another country. The fast-food market may be quite different from its success in the United States. In addition, it will probably be more costly to start a franchise in another country, since the policy of most franchisers is to sell rights to an entire country versus a specific geographic location. Generally, franchisers require a multi-unit commitment to open several locations within a certain period. Usually, they sell the franchise rights to a national of that country.

There are several important factors to consider before becoming involved with an international franchise. First, determine if you can open a business within about 90 days. If it takes longer than that, look for another country. Ask if you are required to make a joint venture with a citizen of that country who must own some percentage of your company. Can you take a profit out of the country? Some franchises require that any money earned must be reinvested in that country. Also ask how much of the raw product or materials must come from that country. Most important, ensure that all money exchanged shall be in U.S. currency at the exchange rate on the first of the month and the fifteenth of the month at 12 noon Greenwich mean time. Last, obtain legal counsel from an attorney in that country to help you understand requirements and customs for conducting business there.

Research which fast-food franchisers have international locations and whether you would be able to purchase the rights to a foreign country. The World Wide Franchise Directory, available in most libraries, is a guide to franchise opportunities around the world. The library will also have Doing Business In... published by Price Waterhouse. This is a series of books focusing on how to operate ventures in many different foreign countries.

While at the library, access the National Trade Data Bank (NTDB) on CD-ROM. This is a database about marketing and doing business abroad developed by the U.S. Commerce Department. Or contact one of the Commerce Department's regional offices or the International Trade Administration for additional information. The office will conduct customized market research for a fee in areas where the government has a foreign office.

Another good source for gathering information concerning international franchises is to attend the annual International Franchise Trade Show sponsored by the International Franchise Association located in Washington, D.C. You can contact the IFA about its shows at 202-628-8000. There are also international franchise fairs held abroad that feature how to start a franchise business in various countries.

As a rule, franchisers do not provide funding for opening a franchise business. They can assist you with leasing agreements for obtaining necessary equipment. Franchisers can also refer you to preferred lenders that they have worked with.