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Skip to 0 minutes and 10 secondsResearch shows that franchisors approach expansion in three different ways.

Skip to 0 minutes and 20 secondsThey may build their business to be strong at home and then only consider expanding when the domestic market is almost fully exploited. They may respond opportunistically to inquiries from prospective franchisees. Thirdly, they may look to stronger foreign markets when their own domestic market is going through a business downturn.

Skip to 0 minutes and 49 secondsWhen the franchisor has decided on a strategy, it needs to build a suite of agreements that can be presented to master franchisees or area developers. If the franchisor is entering into markets that require compliance with specific law, it will also need to create documents that comply with those laws. This might include expansive disclosure. For example, in the USA where every state has a slightly differing requirements. Every country that has specific franchise law also has slightly different document requirements, so the franchisor needs to make sure that the people managing the brand in each country commit to complying with the local laws and to updating the documentation whenever the laws change.

Skip to 1 minute and 36 secondsThe franchisor needs to consider what might happen if someone joins the business and then decides it's not for them. It must be possible for them to sell the business without trashing the brand. Listen to the expert interviews and you'll find that Gilles Menguy, a French franchise lawyer has given a lot of thought to this issue.

Expansion strategies

Research shows that franchisors approach expansion in three different ways.

They may build their business to be strong at home and then only consider expanding when the domestic market is almost fully exploited.

They may respond opportunistically to enquiries from prospective franchisees.

They may also look to stronger foreign markets when their own domestic market is going through a business downturn. When the franchisor has decided on a strategy, it needs to build a suite of near-standard-form contracts that can be presented to master franchisees or area developers.

In this video Dr Jenny Buchan discusses each of these attitudes towards expansion.

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International Franchise Law: the World is Yours

UNSW Sydney

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