Managing Across Countries, Cultures, and Time-Zones: Best Practices for Global Franchisors
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While becoming a truly global franchisor involves a significant investment of time and resources, it can be an exciting development that can catapult your organization to the top of its industry.
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By Graham Weihmiller, CFE
As globalization continues, businesses everywhere — including franchised businesses — are increasingly looking beyond their own borders for growth. This is for good reason as technology and transportation make it more possible than ever to conduct business on a global scale thereby accessing opportunities that could never be achieved within a single market. At the same time, there are important considerations for any franchisor looking to become global in scope. BNI is the world’s largest referral marketing organization and a global franchisor with operations in 73 countries. Here are some of the primary considerations a franchisor should consider before venturing abroad.
Avoid Half-Measures
If you’ve made the strategic decision to be a global franchisor, don’t do it half-way. Have you distributed your support team across the globe to get them closer to your franchisees? Does your on-boarding process incorporate visits by your headquarters team to franchisees in their home markets? Have you planned for your main franchisee conference to be outside your home country perhaps on a rotating basis? Are your senior-most teammates spending a significant amount of time visiting with franchisees in their
home country?
home country?
If the answer to any of these is “no,” I’d suggest an offsite session with your senior team to see if you’re really going to be a global franchisor — or simply a domestic franchisor that happens to have some foreign outposts.
Globalize Your Routines and Communications
To demonstrate your commitment to globalizing your brand, it will be important to have management routines and communications vehicles that effectively reach your franchisees. Be sure not to always have your foreign franchisees attending calls at odd hours — your domestic team should be sharing in the off-hours routines. Decide early on how you’re going to handle (and pay for) the cost of quality translation. The cost and time involved won’t be insignificant but it’s essential to do internal and external communications right. The landscape is littered with stories of organizations that have done their translations using Google Translate and have come to regret it.
Wanted: Exceptionally Strong Franchisees
While recruiting exceptionally strong franchisees is key to success in your home country, it’s even more important when they’re leading operations further afield from your headquarters support team. Ensure that your franchisees are capable of operating and representing your brand in new regions and new situations. It is critical to ensure clear and candid communications with your foreign franchisees so your support team can best understand their progress and best support their success.
While we’re all trained to think 100 percent consistency is better than 80 percent consistency, this may not be the case when building a global franchise. Customer expectations, business norms, employee practices, and supply chains generally differ markedly across countries and it’s important to recognize and address these differences. Early on, it’s important to clearly document what’s mandated and where there is some flexibility in your model so foreign franchisees can adjust operations to best serve their markets. You will likely find that some of the adaptations developed abroad significantly benefit franchisees in your home country as well.
New Markets, New Sensitivities
When you make the decision to become a global franchisor, it’s important to understand that you’ll be operating your brand in countries where cultural norms, political views and religious customs may be very different from those of your home country. In most cases, it will make sense to ensure your organization steers clear of any political or religious communications or affiliations of any kind. Instead, focus your employees and franchisees on your organization’s culture, mission and vision.
Compliance is Key
Franchising is a regulated industry and it’s critically important to ensure your organization is knowledgeable — and compliant with — all applicable regulations. You’ll need qualified legal counsel in each of the countries in which you operate. Don’t settle for “global advisors” who have a general sense for the regulatory environment in a particular country. While it can certainly help to have internal or external general counsel, they should ensure you’re interacting with qualified counsel on the ground in the countries where you operate. Remind your counsel that when they’re not sure of an answer to a particular question, it’s fine to say so and to do some research to provide you with the correct information. You don’t want them “shooting from the hip” regarding regulations in new countries. Also, remember that certain regulations within your home country may govern your organization’s conduct while operating on the ground in other countries.
Face Time
Instead of hosting phone calls with foreign franchisees, host videoconference calls. This is about 80 percent as good as being there in person but nothing works as well as an in-person visit. When assembling your franchisee support team, be sure each one of them is comfortable traveling abroad on a regular basis to meet with franchisees in their home markets. Ideally, your support team will be comprised of high-energy professionals who enjoy experiencing new countries and cultures. When visiting other countries, your support team should — in coordination with your foreign franchisees — visit with customers and vendors to get a sense for what elements of the operations vary from your home country operations. Be sure they have time during their trips abroad to experience each country’s culture and history. Your franchisees will appreciate that they’ve taken the time to learn about their country.
Intellectual Property
As you may already have experienced, protecting intellectual property is expensive in one country let alone in dozens of countries where you may one day operate. However, not protecting your intellectual property can be even more expensive. This is another area where having qualified local legal counsel is paramount. You will likely need to balance your desire to protect your intellectual property in foreign markets with the realities of your budget.
Prioritization is key. Of course, you need to prioritize any countries in which your brand currently has operations over countries where you may someday have operations.
Technology Platforms
The earlier you define your global ambitions, the better your technology team and vendors can incorporate it into your core technology systems. Building globalization into your systems early on can help you avoid spending millions of dollars, and lots of time later to rebuild your systems to incorporate things like “right-to-left” languages (e.g., Hebrew and Arabic). This is particularly the case when your organization has a homegrown system versus an “off-the-shelf” system. When you’re budgeting, it’s also important to factor in country-specific regulations regarding data security, sharing and storage that often require significant investments in software, hardware or internal policies to ensure compliance.
Sustainable Growth
If you’re feeling like venturing abroad can be expensive, you’re starting to get the picture. To ensure you have adequate resources to support your foreign franchisees, you should carefully forecast your expected costs for on-boarding franchisees in a new country and then price your upfront franchise fees to recover some or all of those costs. Of course, your support costs don’t stop when a new franchisee is on-boarded; they’ll need on-going support to be successful. Ensure your royalty structure will provide your organization with sufficient resources to fully support your franchisees’ success throughout their whole journey with your brand.
While becoming a truly global franchisor involves a significant investment of time and resources, it can be an exciting development that can catapult your organization to the top of its industry. Often, lessons learned and scale acquired from operating in countries outside of your home country can help ensure your brand is the market leader in your home country. Careful planning, thoughtful advice and a relentless focus on supporting franchisees in foreign markets can ensure your brand is highly-successful both at home and abroad.
Graham Weihmiller, MBA, CFE, is Chairman & CEO of BNI. He is also a Director of the BNI Foundation, which helps underprivileged children across the world access life-changing educational opportunities.