3 Warning Signs That Your Franchise Company Shouldn’t Go Overseas

Posted by Cedric Joshua Martinez

Dec 16, 2016 2:01:13 PM

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It may be tempting to bring your franchise to faraway lands and opening your business to a new market, but many with a wealth of experience in franchising would tell you to take a step back before making such a huge decision. Opening a foreign branch requires a large initial (and of course, continuous) investment - and in spite of the resulting opportunities for your franchise company to grow, you certainly wouldn’t want to go through problems you could easily avoid with proper preparation.

You only really need two things to dodge these risks without sacrificing your opportunities: knowledge and perception. To be more specific, the knowledge of what warning signs to watch out for, and the perception to be aware of them at all times. While this blog post can’t improve your sense of awareness, it can provide you with the necessary information to know what to look for before you take that leap.

1. There is a language or cultural barrier

When moving to a foreign branch, chances are you will be hiring from the local population to fill your ranks. Depending on the country, these people could have vastly different means of communication, values, and traditions. In a place where collaboration is key, such a significant gap can cause discord among your employees. This could even escalate from coworkers not getting along to major legal issues that could shut down your branch.

2. You don’t know any of that country’s laws

When stepping on foreign soil, you’re automatically under jurisdiction of their rules and regulations - and that applies to your business as well. From paying taxes to hiring, each country adheres to a different set of processes and laws. The forms and paperwork you’re used to may not be the same and may lead to a lot of confusion. Some countries may have the same set of laws as your home country, but it’s never a bad idea to be cautious.

The answer to the above two points is simple: research. Looking into your target country’s government, culture, and language will save you from months to years of frustration. A simple Google search or asking an expert can actually help you nip such problems in the bud. Of course, you won’t be able to master it all overnight, but a general understanding should be enough for you to not get in trouble.

3. The numbers aren’t looking good

You may have enough capital to bring your business there, but do you have enough reserve to actually stay? There are many expenses other than the initial investment that are hidden and are only discovered after the transfer is complete. Maintenance fees, overseeing construction, training, and so many other aspects hide in plain sight that will leave you with empty pockets if you don’t come in prepared.

Simply looking through your franchise information can immediately give you an idea of the financial status of your company. Make it a point to check your financial statements. Analysing your data (or hiring someone else to do it for you) can give you the overview you need to judge whether or not your franchise can survive the long term if you were to expand.

Click here to learn more about financial statements.

Take note of these three warning signs before venturing off into new lands for your franchise business to conquer!


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Topics: Franchise Accounting

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