FX in Franchising – Daniel Anderson – 12/04/22

Franchising is a huge global industry with $1.75 trillion being contributed to the world economy each year. In the UK alone there are over 900 franchise opportunities which contribute £17 billion each year to the economy.

With such a wide range of products and services provided by businesses that have or could be franchised there is no surprise the industry continues to grow each year.

Well established franchises will often look to expand globally, take McDonalds as an example, the world’s largest and arguably most well-known franchise. After great success and national growth from inception, they now have restaurants in 120 countries around the world.

With global expansion comes the need to deal in different currencies, whether it is set up and maintenance costs or even repatriating royalties payments from the profits generated international franchises will often have a foreign exchange requirement. Whether it’s sending or receiving payments it is important to make sure you are getting a good deal on the exchange rates.

Ocean Capital Exchange have recently become a supplier member of the British Franchise Association, providing members with preferential exchange rates and a tailored payments solution to reduce the costs involved and show greater returns on foreign currency conversions.

There are several ways we currently help franchises both in the UK and abroad as well as private individuals who are looking to invest in a franchise.

  • We work with a franchise in the UK that sells a particular product and imports the goods from the far east. Subsequently they are invoiced in USD. They were originally arranging the payments through the bank but were being charged a 2.5% margin. We reduced this margin by more than half, saving thousands annually.
  • We also work with a UK master franchisor of a well know American food brand. They are required to send monthly royalties payments back to master franchise in the US in dollars.

They were previously using a broker to send the payment but were being charged a 4% margin, we again cut this margin by more than half saving the client hundreds every month.

  • We have also helped individuals who are looking to invest in a franchise in the UK from overseas. The set-up costs can be quite a large amount so we can often show a substantial saving on transfers from abroad.

As the franchising industry continues to grow with many franchises expanding overseas, Ocean Capital Exchange are on hand to support the business and reduce costs on any international transfers.

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