UK: International Franchising In The Fashion Industry - Top Five Tips For Growing Overseas

Last Updated: 14 January 2015
Article by Babette Märzheuser-Wood and Robyn Chatwood

There are many issues for fashion houses considering franchising as their route to international expansion - here are our top five tips.

In the evolution of any fashion brand, growing the business through online and retail stores is a key strategic issue. Following initial launch and consolidation, it is inevitable that, in each fashion brand's life cycle, it will consider international expansion. Then, how to grow will be as important as where to grow.

There are many routes to access new markets, such as through increased online presence, development of flagship stores and joint ventures with partners or licensing. Increasingly, many brands across a spectrum as varied as Tommy Hilfiger1, Benetton2 and Ermenegildo Zegna3 have discovered that franchising can be the premier strategy as it has the right balance between maintaining control of the brand and managing the capital at risk. In short, it can be the easy route to new markets and the expertise of local players can be leveraged, which will help entry into the new country.

There are many issues for fashion houses considering franchising as their route to international expansion so as to minimise loss of control or damage to the reputation of the brand but maximise the potential of the franchise and its revenue streams. In this article, we share our five top tips for fashion brands that are considering expanding internationally through franchising.

1. Understand and protect your brand and other intellectual property

In fashion, brand is king. The manifestation of your brand personality in your products, stores and online presence is what is currently attracting your customers and what will also attract potential franchisees. Franchisees will also be attracted by their perception of your know-how – that you know how to tap into your target customer and to manage a fashion business. You therefore need to understand how your brand, products, know-how and other valuable intellectual property will travel globally to other markets and be packaged for a franchise network.

The prime consideration for every fashion brand will be securing protection for its intellectual property. Successful brands inevitably spawn imitators. Trade marks, know-how, designs, copyright and trade secrets are protected by intellectual property laws in the country that is the target for expansion. Some IP can be registered in the new country whilst some cannot. The main strategic IP issues are:

  • how the IP protection overseas will differ from what you have domestically;
  • what steps are needed to ensure you, as franchisor, will have the necessary protection in the new target market; and
  • how, in addition to securing registrations and other protection through contractual arrangements, you plan to manage your digital strategy (which is a cross-border issue) and online presence as you grow internationally.

IP is a specialist field and it is critical to act early and get the right legal advice. Consider auditing your IP and brand portfolio so that you understand what you have already and what you will need going forward. There are or may be long lead times in many countries to obtain registrations for your trade marks, designs and, in some cases, copyright and you may need to gather evidence of your ownership and use. Prospective franchisees will be reluctant to deal with or invest in your brand if you do not have evidence that you have in place the appropriate rights and that they are protected. These issues need to be considered well ahead of your market entry. Fundamentally, you need to decide which investments you will make and when.

You should also recognise that your know-how, customer database, supplier databases and other IP (copyrights, designs, domain name registrations etc.) may be crucial to the success of a franchise operation. Certain of your know-how should be enshrined in an operations manual and brand guidelines which are suitable for providing to franchisees. It is likely that your manual for how you run your company stores will be a starting point only – usually these documents are not suitable for giving to franchisees without some customisation for a franchised operation. This investment represents another upfront cost which it will be necessary to incur to build a franchise business and you should also be aware of the lead times needed to create such items.

Think about what IP is to be included in the value proposition for franchisees and how you can package it and obtain value and a revenue stream for it – franchisees often value, and you may be able to extract fees for, copyright in advertising and marketing materials, training programmes, domain names and website materials, customer databases, supplier databases and other IP.

2. Effectively plan territories and network: regional versus national rights

When planning your overseas expansion, consider how you will grant rights to a franchisee. Which countries or regions? Exclusive or non-exclusive or a sole franchise? Area development or a master franchise?

You should recognise that almost every prospective franchisee will seek to expand its territory, or want options to take additional territories. You need to consider whether you want to grant rights on a country-by-country basis or on a regional basis, and how much the franchisee should pay for each territory. The broader the scope of rights granted (territory, duration or exclusivity) to a franchisee, the greater the power of that franchisee and your reliance on that franchisee.

Grants of large territories may be good strategy in a region where established networks with a few key players will unlock doors and give access to the prime real estate. It may not be an appropriate strategy in mature markets where there is a large choice of franchisees and structuring options. Longer terms may be appropriate if there is a significant investment to be made by the franchisee which must be recouped.

You should be aware that different countries have different laws for franchising and other forms of commercial agency. Specialist advice will be needed to ensure that you do not make rookie mistakes and agree to a commercial deal which is outside market norms for that territory.

3. Appropriately structure the franchise

How ready your fashion brand is for franchising also needs thought. How is your brand scalable or to be scaled for expansion? Do you intend to source and re-sell products to franchisees and so take a margin on those? If yes, will you have the supply chain infrastructure in place in order to do so? Or do you intend to permit franchisees to source their products locally? If the answer to this is yes, then you will need resources and processes in place for quality control and sourcing support.

Monitoring systems (whether through third party outsourced mystery shopper programmes or in-house) are critical to your success. These assist you in maintaining the validity of your trade mark registrations and ensuring your fashion brand is consistent - irrespective of whether it is the franchisee or you directly who is presenting your product to customers.

You need to understand the foreign ownership, commercial agency and foreign currency laws in other jurisdictions. Some of these laws can prevent you investing directly, or terminating the franchise relationship if it is not right, or even prevent you getting your money paid by the franchisee. Do not proceed with marketing the franchise before you have obtained the appropriate advice from a lawyer with experience in international expansion and who has a global network.

4. Prepare your offer and consider how this may attract franchisees

Another initial step is deciding how you will sell your new franchise proposition. Will you need to engage an agency to find you franchisees? Would that sales strategy impact your brand and speed to market? Would it make more sense commercially and strategically, for example, to tap into existing networks? These could include your accountants, lawyers, professional advisers or other credible sources who have trusted contacts who are successful franchisees looking to expand their brand portfolios.

Necessary preparation for international franchising includes developing a franchisee pack of information for you to provide to prospective franchisees which explains how your brand will be grown internationally. A credible pack will demonstrate your serious determination to grow your brand. The pack should include your concepts for the brand, stores, product range and online presence and provide sufficient information to enable a prospective franchisee to consider whether to take the next step to enter into commercial discussions with you. Some financial information will be required – such as the headline terms for the range of royalty and other services payments, order lead times, your franchisee criteria (such as minimum investment required), any application fees etc. Remember that this is your pitch. It is not your franchise contract or a substitute for a disclosure document or other pre-disclosure obligations with which you may be required to comply. All information must be accurate. No marketing information should misrepresent what your franchise offer is to be.

However, you should not include in your pack any confidential information and you should never include your franchise operations manual. In any event, you should never disclose your valuable confidential information to any third party without having in place an executed non-disclosure agreement. Your know-how is also part of your valuable IP portfolio and must be protected.

It is at this stage that you will need to consider what will be your proposed commercial legal terms and also whether you are legally required to provide pre-contract disclosure to your prospective franchisee. Different countries have different requirements and there are severe consequences if you breach your legal obligations. The risks can include the franchise contract being held to be void and your having to pay the franchisee damages or pay fines or other civil penalties.

5. Get the right commercial terms in place

The right commercial terms between you and a franchisee will ensure that you both have the appropriate allocation of risk and the obligations and responsibilities are clear. Franchises, more than other forms of commercial arrangement, are about relationships and interdependencies. There needs to be an appropriate balance of risk allocation in the contract.

You need to know your power position when negotiating with the prospective franchisee so that you know the areas that you could possibly concede and those that are sacrosanct to the commercial deal or to manage your legal risks. A good adviser will let you know what is "market" and what is not. If your brand is the latest, hottest thing and you have a queue of prospective franchisees who desire a commercial relationship with you, then a firmer contract which favours you will be more appropriate. If this is not the case, and yet you continue to press for unrealistic commercial terms, then you will ultimately have a complex, protracted negotiation with your prospective franchisee, which will result in delay and increased legal costs. Worse, you may attract the wrong type of franchisee who is too willing to do a deal with you on the wrong commercial terms, while the smart franchisees may be less willing.

Some important strategic issues for you to consider in developing your franchise contract are:

  • What will be each party's obligations and when? Are your development targets too ambitious? What if they are not met?
  • Is the franchise opportunity an area development or a master franchise? Will you allow your franchise partner to sub-franchise and sell sub-territories to third parties? Sub-franchising may entail more risk and loss of control but could be a strategy which achieves faster penetration of a market. Should you adjust the remuneration and royalty streams for the different types of structure?
  • Your contract needs to plan for the relationship finishing – will you want to buy back the franchise or sell it on? Will you need rights to step into leases? What are the appropriate non-competes to put into place?
  • Consider what security you may need for claims against the franchisee or for payments made by the franchisee.
  • Dealing internationally will necessarily involve making decisions about which laws will govern the contracts and how the parties will resolve any disputes. Will arbitration be a sensible option? Are foreign arbitral awards recognised and enforced in the territory?

The right legal terms can take time to develop. Usually the onus on the franchisor is to produce the proposed form of agreement so you need to act early to develop your franchise contracts.

In conclusion, many fashion brands are growing internationally through franchising. By following our top tips, you can be sure you are ready to take that next step. If you are thinking of international expansion, planning and implementing the right strategy is key. Dentons is able to help you grow your business. With offices in over 50 countries around the world, we are ideally placed to make sure you get the right advice and the right commercial terms in place.


1. Tommy Hilfiger's website notes that Tommy Hilfiger and its franchise partners operate over 350 stores worldwide

2. Franchise Direct's director of franchisors lists Benetton as 21st in its list of European franchisors – with 6,200 units.

3. The Financial Times reported that, at the end of 2008, Zegna had 291 directly operated stores and 256 franchise outlets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
28 Sep 2017, Seminar, London, UK

On 26 July the FCA published its long-expected consultation paper on the extension of the SMCR to all FCA-authorised firms. The so-called "core regime" introduces the key concepts of regulator-approved senior managers, firm-approved certification staff and conduct rules applicable to virtually all staff.

3 Oct 2017, Conference, Zurich, Switzerland

As the founding Partner of the Europe-Iran Forum, Dentons Europe will once again support this year’s event. This compelling event which explores all Iran-related topics will take place in Zürich on 3rd and 4th October.

4 Oct 2017, Conference, Munich, Germany

Dentons Global Real Estate Group is delighted to be exhibiting once again at EXPO REAL, the International Trade Fair for Property and Investment which takes place on 4-6 October, 2017 in Munich, Germany.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.