As a Canadian franchisee, you might be wondering how difficult it is to penetrate a foreign market, but the process isn’t as intimidating as it may seem. The most common market that many Canadians try to enter is the United States market, for obvious reasons.
Before opening up a franchise location in the USA, it’s good to understand the process so that you can be spared any inconvenient surprises. From there, the sky’s the limit when it comes to expanding your franchising operations in a much larger and more lucrative market.
1) KNOW YOUR STATES
Before opening up a franchise location in the United States, make sure to research the laws held by various states in the union. The federal government has no real jurisdiction over franchise operations, nor do they force registration policies on would-be franchisees. However, this can change at the state level.
For instance, laws in states like New York and California tend to be much less business-friendly than states like Tennessee or Florida. Some may impose stricter policies before you’re able to open a location, while others may offer lucrative incentives in order to entice more entrepreneurship to the state. Whatever the case, franchisors and franchisees should be prepared to file some paperwork with the Federal Trade Commission (FTC) before setting up shop on American soil.
2) RESEARCH YOUR TARGET AREA
The United States is a huge market with plenty of money to go around, but cutting ground requires picking the right location. While it is tempting to set up shop in a sprawling tourist hot spot with plenty of foot traffic – such as Miami, New York City or Nashville, you could end up being outpaced by other franchises that have already established themselves.
Change is a good thing, however. Introducing your restaurant franchise in an area where your menu choices are sparse means you could get a leg up on the competition, while carving out your own unique niche. Alternatively, you could attract so much business that you may have trouble keeping up with the pace. Researching your target area can give you valuable insight as to what you can expect when you finally open your franchise location’s doors, and whether you can hang with the competition while turning a profit.
3) REQUEST AN APPLICATION
In order to open up a franchise location, you must first submit an application to the franchisor’s head office. This is standard operating procedure, and part of the process of establishing a relationship between the two parties. They will get to know you, your goals for your franchise location, and whether you have enough money to make a go of it, while you will understand their brand and service guidelines, as well as other prerequisites you must adhere to.
Once the application is submitted, you will then set up a meeting with a franchisor rep to go over all the details. The rep will then contact you shortly afterwards to let you know that you have been approved, and to go over any final outstanding details. Finally, you’ll be given an FDD disclosure document which details all the necessary criteria required to become a franchisee. This document includes everything from capital requirements and marketing guidelines, to operational and training policies, and opening requirements.
4) SIGNING THE AGREEMENT
Prospective franchisees typically have around 14 business days to analyze the franchise agreement before signing it. This is a good time to ask any outstanding questions, iron out any details, and raise concerns with the franchisor. Once you are satisfied that everything is in order, you’ll be expected to sign the agreement and enter a contractual obligation. Make sure that all details are in writing, including any verbal agreements that might have been exchanged throughout the application process.
Once this process is complete, you’re ready to open your franchise location. This is an excellent time to reflect back on everything you’ve learned, which will make it easier to expand your franchise portfolio in the future, if you so desire.
5) FINAL TIPS
Opening a franchise location in the United States can be very rewarding, but it does require commitment, not to mention money. Bear in mind that opening a franchise in the USA can cost anywhere from $100,000 dollars to $1,000,000, depending on the brand in question. It’s good practice to compartmentalize your money in different accounts, to accommodate different aspects of your franchise.
For instance, it’s advisable to have a large pool of money on hand to deal with emergencies, while another account can handle the rent, equipment purchases, startup costs, etc. While these upfront costs may cause many to hesitate, it’s important to remember that you always have the backing of a successful business model. Your franchise has worked out the recipe for success, and that’s peace of mind worth its own weight in gold. Once you’ve taken care of the upfront costs, you can start focusing on establishing your franchise, attracting patrons, and growing your business.
CONCLUSION
Are you interested in breaking into a new franchise market in the United States? If so, you’re in luck. St. Louis Bar & Grill is moving full speed ahead, beginning with the opening of our first United States franchise location in the state of Florida. We encourage all would-be franchisees to take advantage of this great opportunity to build our network, and expand from east to west, and back again.
Contact us today for more information on how you can be a St. Louis franchisee, and turn your investing dreams into a franchising portfolio that will pay dividends for decades to come!
