British Franchise (Winter 24)

Joint Venture Franchising is our topic in this British Franchise (Winter 24) edition.

Ashtons Franchise Consultant Charlie Dickson reveals the benefits of this slightly lesser known franchise model.

Read the article and browse the entire magazine.

Joint venture franchising is a business model in which the franchisor partners with a local investor or business entity to establish and operate a franchise unit in a specific territory. In this arrangement, both parties contribute resources such as capital, expertise, and local market knowledge to develop and grow the franchise. They typically share ownership, profits, and risks according to agreed-upon terms.

Key Features of Joint Venture Franchising:

1. Shared Ownership: The franchisor and the local partner co-own the franchise unit, usually with the franchisor holding a minority or majority stake depending on the agreement.
2. Local Expertise: The local partner provides insight into the regional market, helping adapt the business to meet local needs and preferences.
3. Resource Sharing: Both parties contribute to the franchise, with the franchisor often providing branding, operational support, and systems, while the local partner invests financially and operationally.
4. Risk Mitigation: By sharing the investment and operational responsibilities, both parties reduce their individual financial and business risks.
5. Accelerated Expansion: Franchisors often use joint ventures to expand into new or challenging markets where local knowledge and partnerships are critical to success.

Benefits of Joint Venture Franchising:

• It allows franchisors to enter markets where direct franchising or traditional models may be less effective.
• Local partners help navigate regulatory requirements and cultural differences.
• It strengthens the brand’s foothold in new territories through collaborative efforts.

Challenges:

• Potential conflicts in decision-making due to shared ownership.
• Aligning goals and expectations between the franchisor and the local partner.
• Complex legal and financial arrangements compared to standard franchise models.

This model is commonly used in international franchising to overcome market-entry barriers and is popular in industries such as food, retail, and hospitality.

Contact us to talk about Joint Venture Franchising and how it could work for you and your business.