2006-12-11
In these two ways of development you will have to find a local partner.
Joint venture
This type of cooperation does not change the system, which will typically be direct franchising or area development. It can be used to take advantage of the foreign partner’s local knowledge, and to gain business or tax advantages in markets where locals are accorded preferential treatment. It can also provide a source of capital, although it is more usual for the franchisor to provide the resources and its local partner to offer expertise. Franchisor is working on a more equal basis with its partner, so he may have more control over the system than under a master franchise arrangement. However, it will also have more responsibility for developing distribution networks and running training programs due to its higher level of involvement.
Master franchisee
Under a master franchise agreement, the franchisor grants a master franchisee the right to offer units to subfranchisees. Depending on the size of territory, the responsibility for developing the system in the new territory (as well as distribution networks and training programs) rests with the master franchisee, rather than the franchisor. This model requires less resources and significantly less capital investment by the franchisor. Additionally, the local master franchisee’s familiarity with its own market will allow the entire system to benefit from its knowledge and contacts. But master franchise arrangements are not without drawbacks. The main problem is finding the right franchise – business oriented, experienced enough and with the capital resources.
Several things you need to remember before you start looking for MF:
- There are only 27 foreign franchise systems developed through master franchise;
- The price of Master licence for Western European countries may bee to high for Poland (see: Poland country of chance);
- Even if you have global brand it may be not recognizable in Poland.
To find perfect master franchisee you should:
- Set up the criteria of perfect master franchisee for your concept (who are you looking for?);
- Prepare the most suitable way of recruitment;
- Make sure your brand is know in Poland or let people know about it;
- Reach your target audience.
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