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Here are some strategic questions to ask yourself before choosing the right expansion method for you:

• What’s the potential of the target market (one, two or several units. Is it in the dozens or even hundreds?) If you’re going to enter a huge market you may start with direct franchising, but this might evolve depending on the growth of the operation.
• Is the system ready for the expansion? Is everything adaptable 1:1 in the new market? Product, packaging, distribution, IT systems and other business solutions. How ready is your brand? (For example, have you researched the meaning of the name in the local language?)
• Do I have the ability to control my franchise effectively? (For example, the geographical distance, language and cultural differences, etc.)
• With these questions in mind, let’s now look at the several ways international franchising is achieved.

Direct Franchise Agreement

• The simplest is a direct franchise agreement. This is a direct contract between the franchisor (or sub-franchisor) and the franchisee. Similar to that of a domestic franchising agreement, direct franchising requires a lot of resources from the franchisor to assist in training, recruitment and the support process. The process is typically a centralised practice. This approach works most effectively when moving into similar cultures with the same cultural and legal norms. An example of this is Sweden to Norway – or even the United States to Canada.

Master Franchise Agreement

• The most common way international franchising is conducted these days is through a master franchise agreement. This is more of a territorial approach where the franchisor grants exclusive rights for the franchisee to establish the brand in another country, state or region. The franchisee gets unprecedented access to a known brand, and with the know-how, has the potential to quickly take a market share of the new region. While for the franchisor, having a local person with local knowledge taking personal responsibility can help mitigate potential political and bureaucratic issues more easily in an unknown region - and even helps to minimise costs and risks involved with researching a new territory.