M&A Is Not Necessary for Overseas Expansion: Assentia Holdings Explains Why Franchising Is Superior in the Medium to Long Term

Assentia Holdings Inc. (Representative: Akira Tsuchiya) has published its perspective—based on over 30 countries and 250+ stores as a specialist franchise support company—in response to frequent inquiries from Japanese companies asking, "Which is more effective for overseas expansion: M&A or franchising?"

Why Overseas Franchising Outperforms M&A

Franchising is superior in the medium to long term. Companies choosing to sell are typically not market leaders in their home countries, and this is even more true when selling to foreign buyers. Proposing franchise partnerships to companies ranked 2nd or 3rd in their industry offers a higher success rate than M&A.

Even within Japan, M&A often faces post-acquisition corporate governance challenges. When acquiring foreign companies, cultural, linguistic, business, and operational differences make governance issues even more severe. Without capable local management remaining post-acquisition, sustainable local operations cannot be expected.

In Singapore, where our representative resides, many local businesses have previously sold operations to Japanese companies. What happened afterward?

We have not seen a single case of sustained success.

Local businesses aim to sell at high prices to capital-rich Japanese firms. Japanese companies, eager to enter new markets, are excited by the idea of instantly acquiring stores with cash.

Naturally, lawyers and accountants conduct due diligence, but this typically focuses on legal and financial due diligence. The most critical aspects for store continuity—human due diligence and mindset due diligence—are often neglected. Employees can leave at any time.

In Singapore:

- Ramen shops acquired by Japanese listed companies have all closed.

- Izakayas acquired by Japanese publicly traded restaurant chains have all shut down.

- Businesses acquired by Japanese listed food service companies were converted into tempura restaurants and then all closed.

Such examples are countless.

Overseas business expansion is not simple.

It is essential for companies to clearly define their purpose for overseas expansion internally.

On the other hand, how does franchising compare?

Local owners who are passionate about building their own business become franchisees and actively drive operations. The Japanese headquarters can expand rapidly with minimal capital and resources, leveraging the local partner’s knowledge and networks.

For details: https://blog.assentia-hd.com/faq-jp/fc-ma

Can You Expand Overseas Without Domestic Franchising Experience?

We frequently receive questions like, "We’ve never expanded via franchising in Japan—can we do it overseas?"

The answer is "Yes, it's possible."

Domestic franchising experience is not a prerequisite for overseas expansion. If a company has operated multiple locations domestically, transitioning to overseas franchising is fully feasible. However, we do not recommend starting with master franchise rights sales. It's crucial to begin with one store and build trust with your partner.

Franchising is the process of formalizing and documenting internal intellectual property (know-how), which is not inherently tied to domestic franchising experience.

We provide full support, and it is entirely achievable.

We are also asked whether having few stores in Japan makes overseas franchising difficult. The answer is also NO.

Even with just one store in Japan, if you can compellingly communicate your brand story and origin, overseas franchising is possible.

You simply need to find franchisees who resonate with your story.

For example, a ramen shop with only one location in Nagano already operates two stores in Mongolia, two in Paris, France (with a third planned for September 2026), and one in Warsaw, Poland.

[Illustration] One store in Japan, locations in Mongolia, France, and Poland

Inbound inquiries from overseas seeking to join Japanese franchises fall into three patterns:

1. Brand-specific requests

2. Business-type-specific requests

3. Open consultation with us (e.g., “We want to bring a Japanese food business to our country”)

The third type is the most common among our inquiries.

We clarify to overseas companies that we are not mere intermediaries (middlemen), and our reputation from domestic franchise successes often leads to this third category.

For instance, a French franchisee initially consulted us about launching a dessert concept. After extensive discussions, we decided to launch a ramen business in Paris. The first store opened two years ago and has been highly successful, expanding to three stores by year-end. Isn’t this a great example where both the Japanese company and the overseas franchisee are satisfied?

For details: https://blog.assentia-hd.com/faq-jp/have-franchise-experience

Historical Evidence for the Advantage of Franchising in Overseas Expansion

Coca-Cola, KFC, McDonald’s, 7-Eleven, Starbucks, Disneyland—every US brand that has dominated the Japanese market has done so through franchising (some under licensing agreements).

History proves that in countries with unique cultures and business practices, local companies deeply familiar with the culture achieve higher success rates as franchise operators than direct company-owned expansion.

Likewise, for Japanese companies to succeed with direct operations in unfamiliar overseas markets requires enormous effort and time.

Partnering with excellent, top-tier local partners is the fastest path to overseas success.

For details: https://blog.assentia-hd.com/faq-jp/direct-vs-fc

About Assentia Holdings

Assentia Holdings is a business design firm specializing in overseas expansion for Japanese franchise businesses. Unlike consulting firms, we consistently support clients in intellectual property structuring and practical overseas implementation. From 2011 to present, we have supported expansions in over 30 countries, including Southeast Asia, Europe, the Middle East, and Africa, across food, retail, and service sectors. We are a team of practitioners with firsthand experience operating franchise headquarters and successfully guiding over 300 stores.

Company Overview

Company Name: Assentia Holdings Inc. (English: Assentia Holdings Inc.)

Industry: Services (Overseas Franchise Expansion Support / Business Design Firm)

Registered Head Office: Chuo-ku, Kobe City, Hyogo Prefecture

Operational Headquarters (Tokyo Office): 6F, Dai-san Takano Building, 2-17-5 Kayabacho, Chuo-ku, Tokyo

Phone: 03-5614-0216

Representative: Akira Tsuchiya

Established: August 2006 (Japanese Corporation)

- Official Website: https://www.assentia-hd.com/

- Overseas Franchise FAQ: https://blog.assentia-hd.com/faq-jp

※Assentia Holdings is a Japanese corporation (Assentia Holdings Inc., established in 2006)