Franchising has an important role in the overall economic evolution of a country and, for companies, it represents a suitable method to expand their business. Those investors who want to know how to start a franchise business can read this simplified guide, complete with examples from four different countries.
Franchising: how it works
Franchising is a means of doing business in which the franchisor (the owner of an existing business) decides to expand by using affiliated dealers, also known as franchisees. This is an alternative to buying an existing company in that the buyer (franchisee) also acquires the business model, know-how and trademarks, having access to a complete and tested business.
The relationship between the franchisor and the franchisee is determined by a franchising agreement through which the owner of the business undertakes to grant the trademark usage rights, the business model and any trade secrets and know-how for the franchisee who will become the affiliated dealer and who undertakes to manage the business according to that business model.
There are many franchising options available worldwide and choosing the right business model and jurisdiction in which to open the franchise, is an important part of starting a franchise business.
Countries to consider when starting a franchise business
Starting a franchising business in Singapore is a simple process and many investors consider this location when thinking about expanding to Asia. The city-state has an important advantage: low corporate income taxes and, apart from that, an international business climate and a good infrastructure contribute to the overall market attractiveness. American franchises are among the most popular in Singapore, particularly fast food chains.
Japan is another jurisdiction to consider when deciding to start a franchise business. It is worthwhile for entrepreneurs to consider the local regulatory framework for franchising in Japan as well as the market particularities, for the country is known to have its own rhythm, usually different from the Easter European one for example. A common scenario is for small and medium companies from surrounding Asian countries to open a franchise in Japan, usually in fields like services, catering and restaurant businesses. Foreign businessmen interested in starting a company in Japan as a franchise, should contact a team of local company formation agents for a fast and hassle-free company registration procedure.
Leaving Asia and turning our attention to Europe, Estonia and Ireland are two options for franchising in the old continent. Estonia has good trademark protection laws and, despite the country’s relatively small size, franchisors who want to do business in Estonia can choose to expend further, to the surrounding markets.
Ireland has seen an increased investor interest in recent years. Domestic franchising represents almost half of all the franchising activities. Irish companies use this mechanism as a means to expand their business. International companies entering the Irish market via a franchise in Ireland are those that have typically made this step in the United Kingdom and are looking for further expansion. The local franchising market is helped by the Irish Franchise Association. Businessmen interested in this investment option are advised to contact a reliable team of lawyers in Ireland for professional legal assistance.