I recently asked several of my U.K. clients a series of questions about their efforts to break into the American market. Their replies were very insightful into the strategic decisions that were necessary for their successful entry into the American market. Plus, they provide an excellent starting point for a discussion of the legal issues and strategic decisions that you should consider. This is the second in a series of posts about the insights of my U,K. clients.
Professional Training Services Company
This rapidly growing company provides innovative business coaching services, programs and training. They've been in business in the U.K. for over eight years and first entered the American market in late 2010.
1. What led to your decision to sell to the American market?
Response: “Large market, existing acceptance of our product/service.”
2. What key factors were considered in making this decision?
Response: “English speaking (minimal program adaptation) - this is a major prime strategy for our global expansion – plus size.”
3. Briefly describe why the American market represents an opportunity for your company?
Response: “Coaching is already established and understood, our model assumes a coach density of 1 per 300,000 of population, so the US market is a major opportunity. In addition, the programs require minimal adaptation for the market, leading to a low cost of entry.”
4. What were your primary legal issues/concerns/problems about selling to the American market? Why?
Response: “Franchise rule issues. Our offering was originally a franchise in the U.K., but has been changed. Nevertheless there were concerns about the model which required some structural changes to the way it will be offered in the U.S. market. Had we been forced to enter the market as a franchise we would have withdrawn as it would have made our proposition uneconomic.”
5. What one issue/concern/problem kept you up at night? Why?
Response: “The difficulty of positioning our business as a seller of product and not as a franchise. The cost of being classified as a franchise would have stopped us entering the market.”
6. What's the best advice you would give another U.K. company wanting to sell to/enter the American market?
Response: “Find a trusted attorney – educate them in your business model and objectives and manage the process closely. As an example, using a specialist franchise lawyer to prevent you being categorised as a franchise is a necessary step (the franchise rule is complex) – but they can be blinkered in their view of what possible alternatives there could be. If you can find someone specialising in your need (i.e. in our case AVOIDING being seen as a franchise) then even if the costs are higher, the time taken could be significantly shortened. A lawyer with real commercial acumen is a valuable partner indeed - we know this from experience as our U.K. lawyer is just such an animal!!”