How to Prepare Your Franchise to Enter a New Market 

Expanding into new markets can keep a brand competitive and diversify its customer base. Sometimes, strategically reorienting your brand to cater to a new market is essential in maintaining relevance in an ever-changing competitive landscape. There are several crucial steps and implications of franchising in a new market. This article will explain how franchisors can prepare their brands to enter new markets. 

1. Conduct Thorough Market Research

The first and one of the most crucial steps you will need to take to expand your franchise into a new market is to conduct thorough market research. There are various ways your franchise or business model can enter new markets. For example, you may want to:

• cater to a new, specific target market with a new range of products;
• tap into a previously unreachable customer base in a new region; or
• adapt your franchise model to a new business format. 

Each of these options requires careful research and planning. You must conduct due diligence and ensure you can provide viable opportunities for franchisees. You can evaluate the viability of your ideas by assessing:

• your target customer’s preferences; 
• market dynamics, including competition and trends; and
• the laws and regulations that could affect your proposed business activities. 

Evaluate how you will adapt your business model, products and services to fit the new market’s preferences and any relevant regulations. This initial process can involve surveys, data analysis, and consulting with professional advisors, such as lawyers or business consultants. 

When you have a complete picture of your plans to enter the new market, it is a great idea to develop a pilot program to test your idea. Conducting pilot testing helps mitigate risk and allows you to tweak and perfect your plans before full-scale implementation. 

2. Intellectual Property Protection 

As a franchisor, you will understand the vital role branding plays in your business. It is how customers recognise your brand and differentiate it from your competitors. 

If you are considering entering a new market, protecting your intellectual property (IP) is crucial. You must do so even if you have previously registered your IP assets. Your approach will differ depending on whether you are entering a new territory or expanding your product or service offerings into a new category. 

Suppose you are considering territorial expansion and want to franchise overseas. In that case, you will need to research and seek legal advice. Then, you can determine whether you need to register your brand’s IP rights in the target country. 

Alternatively, if you are considering expanding your brand’s product and service offering, you should check your trade marks. In the UK, brands select categories in which they will protect their trade marks. When registering trade marks, the Intellectual Property Office (IPO) requires you to choose the classifications in which you want to protect your trade marks. These are different classes of goods and services, such as ‘textiles’, ‘sporting goods’, ‘communications’ and ‘hospitality’. 

The classes you select are those in which you intend to protect your trade mark. For instance, a hotel chain’s logo would not be protected under ‘education and entertainment’ if registered only under ‘hospitality.’

Therefore, if you plan to expand your offerings or rebrand, consider registering your trademark in additional categories to cover future uses. Be aware that the more classifications you choose, the higher the registration cost.

3. Prepare Franchisees 

If your plan to enter a new market impacts your existing franchisees, you should communicate this to them clearly and transparently. Be open to their feedback. 

As the franchisor, you are responsible for the franchisee’s training and support. Whether your idea requires recruiting new franchisees or retraining existing ones, you should prepare a training program. This program will prepare franchisees to execute your new ideas effectively. You should ensure that training equips franchisees with the knowledge and skills they need to succeed in the new market. 

Such training might include: 

• on-site training; 
• online courses; 
• mentoring programs; and 
• providing access to resources. 

You should prepare a new franchise operations manual or update the existing manual in line with any substantial changes in your brand. This manual should reflect practices and specific procedures and explain how franchisees should operate their businesses in as much detail as possible. 

UK Franchisor Handbook

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Key Takeaways

As a franchisor, preparing your franchise to enter a new market requires thorough research. This research will enable you to generate a detailed plan and inform you of whether this project could succeed. Early stages should also include pilot tests. This will help you identify what is working well and what requires modification before expanding the concept across your network or investing heavily in full-scale market entry. 

Following the initial planning stage, the next crucial step is to protect your intellectual property in the area you intend to move into. Then, if your idea affects your existing franchisees, discuss your plans with them and take their feedback on board. If you had a successful pilot stage, show them how the idea will work in practice. Whether your plans require you to recruit new franchisees or update existing ones, you must provide training and support to ensure franchisees can effectively put your plans into action. 

If you are a franchisor who would like legal advice about the implications of entering a new market, our experienced franchise lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.