International franchising is a popular entry mode strategy for breaking into new markets. But that doesn’t mean it’s a simple strategy. Learn the basics on how to become a franchiser in the U.S. with this introductory guide.
Is Franchising in the U.S. a Wise Business Move?
The United States franchise industry allows for companies to license their brand and distribute it to a separate business. The franchise industry has consistently grown since 2014, finishing out 2018 with just under 760,000 franchise establishments.
In 2017, the combined economic output of franchise establishments in the U.S. was $713.2 billion. For franchises looking to break into the U.S. market, the rewards can be more than just lucrative. They can be life changing. However, many hesitate to take the first step.
The First Steps to U.S. Franchising
Franchise laws in other countries aren’t as strict as those in the U.S. For this reason, it’s always recommended to speak with an attorney familiar with franchising and local laws. But to get a consensus of the steps needed to break into the U.S. franchise market, here is a brief outline.
- Conduct research prevalent to your locational target market, not just the U.S. as a whole.
- Assemble a project management team, including consultants and lawyers.
- Write a business plan with financial information and goals.
Once you’ve completed these steps, it’s time to hold a meeting with your team to make sure your products and/or services are a fit for your target market, can be supplied fast enough to meet demand, and that your financial projections make sense to continue.
If you’re given the green light, it’s time to focus on the legalities, paperwork, and execution of your business plan.
Of course, these steps make up a basic explanation of how to become a franchiser in the U.S., but they should be enough to get you started.
U.S. Franchising Mistakes to Avoid
Finally, as you move towards your goal of franchising in the U.S., avoid the following common mistakes.
Ignoring cultural differences
Understanding how your product will be perceived in the U.S. market is a detail you can’t overlook.
Letting fear get in the way
Entering a new market, whether in the U.S. or not, is intimidating. But putting off the first step due to fear alone is a mistake many franchise owners regret.
Underestimating legal advice
The U.S. has a reputation for being quite litigious. Take the time to consult with a legal professional to avoid unnecessary legal hurdles.
Want to learn more about franchising in the U.S.? Reach out to The Franchise Guru to speak to a lawyer specializing in franchise laws and regulations.