Setting up a Global Franchise
Discussion
Chaps. I need some sources of information.
I have put together a team to produce a unique product and have identified a global market. The product itself is totally non-patentable, being constructed entirely from existing technology so it really needs a fast route to market. Obviously quite a delicate issue and I'm sure no-one will take offence if I don't disclose the market or type of product.
This is entirely new and solves a lot of the problems we have experienced in the target market. This is not a Pyramid scheme or 'Buy a Hotdog machine with our logo and make millions' type thing. Just so we're clear
It's proper
Couple of questions.
We would want to sell distribution rights to distributors in different countries. Where the hell do you start? In the UK you would set up a company and then sell franchises off the back of it. I understand this much. Can you do this globally from a UK based company?
How do you get in touch with good VC's who could make this happen? Would I necessarily need them?
I don't like to admit it, but it's a bit daunting and I could end up playing with some very big boys and I don't really want them skinning my knees and nicking my lunch money
Any help, pointers, book references etc would be gratefully received.
ETA: Jesus it's late. Mental note to self: Employ people to do the graveyard shift.
I have put together a team to produce a unique product and have identified a global market. The product itself is totally non-patentable, being constructed entirely from existing technology so it really needs a fast route to market. Obviously quite a delicate issue and I'm sure no-one will take offence if I don't disclose the market or type of product.
This is entirely new and solves a lot of the problems we have experienced in the target market. This is not a Pyramid scheme or 'Buy a Hotdog machine with our logo and make millions' type thing. Just so we're clear
It's proper
Couple of questions.
We would want to sell distribution rights to distributors in different countries. Where the hell do you start? In the UK you would set up a company and then sell franchises off the back of it. I understand this much. Can you do this globally from a UK based company?
How do you get in touch with good VC's who could make this happen? Would I necessarily need them?
I don't like to admit it, but it's a bit daunting and I could end up playing with some very big boys and I don't really want them skinning my knees and nicking my lunch money
Any help, pointers, book references etc would be gratefully received.
ETA: Jesus it's late. Mental note to self: Employ people to do the graveyard shift.
Edited by KingRichard on Saturday 12th May 01:18
I think it's going be difficult to sell francises before the infrastructure is in place and there is a track record of sustained profits.
The idea of a franchise is generally to make it easy for a Franchisee to be able to start up in business easily by buying a working and proven business model.
It takes a lot of hard work on behalf of the Frachisor to create a valuable brand, and then it takes to time for it to be demonstably workable and profitable. If you want to create a franchise without regard to the above, the price should reflect this but then you will also be up against credibility issues.
A Licence Agreement maybe a be a better solution because you are not selling a business model you are just selling the rights to do or sell whatever your business does.
If you want to keep your own work to a minimum it may be worth considering a Master Franisee/Licencee in foreign markets who should be allowed to appoint their own sub Franichisees/Licencees.
Either way, the potential Franchisees/Licencees will want to see a proper working model and profitability, so you should consider getting this in place first.
Generally speaking it is wise to undertake thorough market reseach to be clear that this a demand then consider contacting companies already in the sector (but are struggling), do some good old fashioned leg work and banging or doors, or find franchise agents in the countries concerned that are already connected.
Good luck with it, and let us know how you get on please
The idea of a franchise is generally to make it easy for a Franchisee to be able to start up in business easily by buying a working and proven business model.
It takes a lot of hard work on behalf of the Frachisor to create a valuable brand, and then it takes to time for it to be demonstably workable and profitable. If you want to create a franchise without regard to the above, the price should reflect this but then you will also be up against credibility issues.
A Licence Agreement maybe a be a better solution because you are not selling a business model you are just selling the rights to do or sell whatever your business does.
If you want to keep your own work to a minimum it may be worth considering a Master Franisee/Licencee in foreign markets who should be allowed to appoint their own sub Franichisees/Licencees.
Either way, the potential Franchisees/Licencees will want to see a proper working model and profitability, so you should consider getting this in place first.
Generally speaking it is wise to undertake thorough market reseach to be clear that this a demand then consider contacting companies already in the sector (but are struggling), do some good old fashioned leg work and banging or doors, or find franchise agents in the countries concerned that are already connected.
Good luck with it, and let us know how you get on please
Thanks Mark.
Your description of Licensing agreements sounds more like the angle I would want to take. I'm running a business already that takes up masses of time, so I'm not looking for another project that would need micro managing by myself. Setting it up and being the middle man would be ideal, but I realise there will be more obligations than that obviously.
The catch 22 that I have is wether to go and market this product before we have a track record and potentially harm the future value of the product and ongoing service (ie: If you sell it cheap because it is unproven, it may be tricky to increase the unit value of revenue streams later on). Or prove it in one geographical area (I know it would take the UK sector of this industry by storm), but then risk losing the idea to heavyweight competition.
There are lots of big PLC's in aligned industries who could make this happen in a flash, but haven't seen the gap in the market. Is it possible for the average Joe in the street to make a joint venture with one of these big boys? Maybe licence the product to them to market and sell?
Is there any level of legal protection I can take to protect my product in any way, at any level? Can you trust a large organisation?
My natural scepticism and my own awareness of what I take given half a chance, would lead me to believe 'Not Really'. Anyone with experience of this?
Thanks again
Your description of Licensing agreements sounds more like the angle I would want to take. I'm running a business already that takes up masses of time, so I'm not looking for another project that would need micro managing by myself. Setting it up and being the middle man would be ideal, but I realise there will be more obligations than that obviously.
The catch 22 that I have is wether to go and market this product before we have a track record and potentially harm the future value of the product and ongoing service (ie: If you sell it cheap because it is unproven, it may be tricky to increase the unit value of revenue streams later on). Or prove it in one geographical area (I know it would take the UK sector of this industry by storm), but then risk losing the idea to heavyweight competition.
There are lots of big PLC's in aligned industries who could make this happen in a flash, but haven't seen the gap in the market. Is it possible for the average Joe in the street to make a joint venture with one of these big boys? Maybe licence the product to them to market and sell?
Is there any level of legal protection I can take to protect my product in any way, at any level? Can you trust a large organisation?
My natural scepticism and my own awareness of what I take given half a chance, would lead me to believe 'Not Really'. Anyone with experience of this?
Thanks again
KingRichard said:
Thanks Mark.
Your description of Licensing agreements sounds more like the angle I would want to take. I'm running a business already that takes up masses of time, so I'm not looking for another project that would need micro managing by myself. Setting it up and being the middle man would be ideal, but I realise there will be more obligations than that obviously.
The catch 22 that I have is wether to go and market this product before we have a track record and potentially harm the future value of the product and ongoing service (ie: If you sell it cheap because it is unproven, it may be tricky to increase the unit value of revenue streams later on). Or prove it in one geographical area (I know it would take the UK sector of this industry by storm), but then risk losing the idea to heavyweight competition.
There are lots of big PLC's in aligned industries who could make this happen in a flash, but haven't seen the gap in the market. Is it possible for the average Joe in the street to make a joint venture with one of these big boys? Maybe licence the product to them to market and sell?
Is there any level of legal protection I can take to protect my product in any way, at any level? Can you trust a large organisation?
My natural scepticism and my own awareness of what I take given half a chance, would lead me to believe 'Not Really'. Anyone with experience of this?
Thanks again
Your description of Licensing agreements sounds more like the angle I would want to take. I'm running a business already that takes up masses of time, so I'm not looking for another project that would need micro managing by myself. Setting it up and being the middle man would be ideal, but I realise there will be more obligations than that obviously.
The catch 22 that I have is wether to go and market this product before we have a track record and potentially harm the future value of the product and ongoing service (ie: If you sell it cheap because it is unproven, it may be tricky to increase the unit value of revenue streams later on). Or prove it in one geographical area (I know it would take the UK sector of this industry by storm), but then risk losing the idea to heavyweight competition.
There are lots of big PLC's in aligned industries who could make this happen in a flash, but haven't seen the gap in the market. Is it possible for the average Joe in the street to make a joint venture with one of these big boys? Maybe licence the product to them to market and sell?
Is there any level of legal protection I can take to protect my product in any way, at any level? Can you trust a large organisation?
My natural scepticism and my own awareness of what I take given half a chance, would lead me to believe 'Not Really'. Anyone with experience of this?
Thanks again
If you sure that's it's worth doing, then my advise is go right ahead and do it. As you probably know, any business is only as good as the people (team) within it, so make sure you build a great team.
If you are going to approach any other companies with a view to a JV or sale then you should have a cast iron non disclosure, confidentiality and non circumnavigation agrrement in place. If you have a name for the product/service you should consider registering the trade name asap.
Edited by TDIPLC on Sunday 13th May 17:46
Interesting conundrum.
We do 'similar' type stuff. We have found it is critical to tie up the channel through which you are going to sell/market. Either directly (retail) or indirectly (agents). So if your product is to be sold via the high street, tie up the retailers.
If you try the 'JV or Sale' with larger company, they might just nick your idea, and it really doesn't matter how many bits of paper you can wave at them (NDA etc), because at the end of the day, they will know you haven't got the money to sue them. Sad but true.
We do 'similar' type stuff. We have found it is critical to tie up the channel through which you are going to sell/market. Either directly (retail) or indirectly (agents). So if your product is to be sold via the high street, tie up the retailers.
If you try the 'JV or Sale' with larger company, they might just nick your idea, and it really doesn't matter how many bits of paper you can wave at them (NDA etc), because at the end of the day, they will know you haven't got the money to sue them. Sad but true.
ysnnim said:
Interesting conundrum.
We do 'similar' type stuff. We have found it is critical to tie up the channel through which you are going to sell/market. Either directly (retail) or indirectly (agents). So if your product is to be sold via the high street, tie up the retailers.
If you try the 'JV or Sale' with larger company, they might just nick your idea, and it really doesn't matter how many bits of paper you can wave at them (NDA etc), because at the end of the day, they will know you haven't got the money to sue them. Sad but true.
We do 'similar' type stuff. We have found it is critical to tie up the channel through which you are going to sell/market. Either directly (retail) or indirectly (agents). So if your product is to be sold via the high street, tie up the retailers.
If you try the 'JV or Sale' with larger company, they might just nick your idea, and it really doesn't matter how many bits of paper you can wave at them (NDA etc), because at the end of the day, they will know you haven't got the money to sue them. Sad but true.
No Win, No Fee?
If you've got experience of tying up a distribution chain before launching a product, would you mind if I emailed you for some more advice? Or, if we can keep things general, we could discuss on this forum.
Cheers
Dave
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