Start a franchise or extend sales?


A local company I know regularly goes abroad to sell their products trough an extensive network of distributors except in some regions where they have little presence for doing business.

I've spotted some interesting leads that may result in new customers in one underexploited region. I'm considering either presenting a specific sales/franchising plan or try to work tighter to extend their network with their current strategy.
Which considerations should I take into account? I'm worry about P&L so I'm not sure how to distinguish between which risks/costs I should manage from those of theirs responsibility.
Any suggested criteria?


asked Nov 13 '09 at 23:48
532 points
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1 Answer


A nice way to protect P&L is to find a reseller willing to accept the following terms:

  1. Monthly minimum (even just $1000/mo is enough to weed out people who aren't serious)
  2. Good commission % but no "base" from you.
  3. They do (at least) Level 1 tech support. (Especially necessary with varying timezones or languages)

In exchange, you give them:

  1. Exclusive rights to the area. Even if a lead comes in naturally to you, you re-route the lead to them.
  2. Direct feedback channel to you -- you're going to help them with potential customers with e.g. features, support, etc..
  3. They get to advertise or otherwise promote in their region or online, without limit.

You can waste time this way of course, but it's hard to lose money from a P&L perspective. This is a fair arrangement and I've personally been very successful like this.

Note that, in any case, resellers who won't agree to the first three things are probably not serious resellers. You need people actively moving product, otherwise it's not worth your time.

answered Nov 14 '09 at 07:13
16,231 points

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