International expansion comes with its own set of challenges that may be more extreme than what you have faced setting up for franchising in the U.S. We tell clients, “do not do it just because you want to brag to your buddies at the country club.” If that’s your motivating factor, it’s not a good reason.
You have to be over royalty break-even, and you have to view international franchising the same way you are considering domestic franchising. It is a long-term play. Although you will get a pile of money upfront, it’s potentially not going to be profitable. In the first couple of steps, you’re going to be learning everything and it’s going to take a massive chunk of your brain and time as the founder. You should be sure that your domestic franchise system is really humming before we would recommend that you consider expanding into international markets.
As a franchisor, you are always going to have people who want to take you internationally. It is a massive distraction, and until you own the US market, you should not even touch it because it is so different. You must be confident in what you are doing domestically because you are multiplying your risk. Our advice is to always get a big enough check upfront, because if you never get another check, it was still worthwhile. As a general rule, we do not encourage our clients to consider international expansion unless you put your toe in Canada. But even there, it’s difficult, and there are a whole host of issues.
Finally, consider leaving money on the table for the next person. Part of the valuation proposition for franchisors is scalability, which implies there are more places to bring the concept. So, leave some money on the board for the next person to branch out.