There are two frequently used approaches in expanding overseas. The first involves the ‘proactive’ franchisor conducting a detailed analysis of potential target countries followed by a rigorous search for a strong local partner. The second, involves the ‘reactive’ franchisor receiving an overseas enquiry out-the-blue before Googling ‘how do I franchise my business internationally?’.
Regardless of the approach, there are some common challenges associated with international franchising, such as: language barriers, time zone issues, tweaking the business model to make it suitable for the target country and managing a relationship with the franchise partner from afar. These challenges can be difficult for a franchisor to adapt to.
So, what has this got to do with Scotland? Well, we have noticed that Scotland is increasingly being seen by franchisors based south of the border as a bit of a foreign land and, to a certain extent, they are right. Like other international jurisdictions, Scotland has its own legal system and Government which controls everything except a small number of reserved matters such as defence, foreign affairs and immigration. It may surprise some readers to learn that the Scottish Government even have control over Income Tax bandings and are progressing with consumer protection laws which will likely differ from the rest of the UK.
Most notably, Scotland has separate and distinct education and healthcare systems which affects a large number of franchise businesses operating in these sectors in the UK. There are different education syllabuses, different healthcare inspection bodies, different local authority commissioning processes. There is an ever-growing divergence in the way that businesses are governed and are required to interact with their customers and with calls for increased devolution, federalism and, of course, full Scottish independence, these differences are tipped to grow, rather than contract.
As a result, we have witnessed a number of innovative franchisors choosing to treat Scotland as they would any other international territory by appointing a ‘Master Franchisee’ for the country. The Master Franchisee’s role is to adapt the business model for Scotland (working in conjunction with the franchisor, of course), recruit franchisees and oversee the operation of the business in Scotland (we have even seen the creation of platform master franchisees, where a Scottish master franchisee carries out the role of master franchisee for a number of different brands!).
In our view, Scotland can be a very useful destination for a ‘pro-active’ franchisor looking to dip their toe into international franchising and pilot their Master Franchise model. It gives franchisors the experience of working alongside a master franchisee and managing that type of relationship without the hassle of language barriers, time zone differences and expensive travel costs. Whilst it may not be for everyone, this is a trend we fully expect to see more of in 2021 and beyond!
Biography – Andy Fraser, Albany Fraser Solicitors
Andy Fraser is the founder of Albany Fraser Solicitors, a commercial law firm with franchising at its heart. He set up Albany Fraser in 2019 with a view to helping franchisors and franchisees of all shapes and sizes make smarter franchising decisions. Andy is accredited by the British Franchise Association as a ‘Qualified Franchise Professional’ and is one of only a small number of lawyers in the UK to have been awarded this status. In addition to being a solicitor, Andy originally trained as a franchise consultant with one of the UK’s leading franchise consultancy practices where he worked on franchising projects for brands such as Ralph Lauren, American Eagle Outfitters, Esprit and Whittard of Chelsea.