Best Practices for International Franchising: Be Aware of Cultural Differences
Franchising World March 2011
Global and robust trade drives the world economy, creating jobs and improving living standards in every country. Did you know that this strengthens U.S. security as well? Partners, allies and franchisees are secure partners and help impose new safeguards with regard to importing, exporting and best business practices.
International franchising can be tedious at best for any franchise company. First, the company must evaluate the amount of time, effort, risk and legal proceedings related to selling a franchise internationally. Does it outweigh the benefits of franchising internationally? Secondly, does the product fit in other countries worldwide and will it substantiate sales, perpetuating more sales? Each unique culture should play a huge part in the evaluation process as well. Candy Bouquet International, for instance, started franchising in Canada because a similar language and culture prevailed and the laws and shipping of product were similar. Following extensive research regarding candy and chocolate consumption in Canada, guidance for the U.S. Department of Commerce and research into similar franchises in our industry, Candy Bouquet decided to take the plunge into the Canadian market.
Be aware of the fact that many countries have franchise regulations. Australia, Brazil, China, France, Indonesia, Italy, Japan, Malaysia, Mexico, Russia, South Korea, Spain and Venezuela have their own specific regulations. It is unwise to decide to sell a franchise in a foreign country because the company has a great lead from that particular country. Start by targeting a particular country or group of similar countries.
To date, our company has franchises in Pakistan, Nigeria, and Gibraltar, Brazil and on every continent to include 40 countries. Europe is usually the most difficult continent to penetrate and our organization also has found that most franchise companies experience the same. European laws are strict, working hours are very different and cultures and languages are concentrated. Each have very distinct styles, language, regulations, working hours, cultural differences, currency differences and tax variations as well.
One commonality is that most franchise companies have to bend and change to the cultural experiences of each individual country. For instance, in the Middle East, many Candy Bouquet’s do not have a rounded shape and are monochromatic. The culture puts them against a wall and not in the center of the room and they may like single colors, not mixed. In Norway, they like salty Swedish Fish gummy candy and in China and Japan the chocolate pieces are much smaller. Each culture rules with their own commonalities and franchises must adjust for the sales volume and personalization of the retail items.
With the release of the October 2010 U.S. International Trade in Goods and Services report by the Department of Commerce’s U.S. Census Bureau and the Bureau of Economic Analysis, U.S. exports of goods and services increased by 3.2 percent in October 2010 to $158.7 billion since September 2010. Also, in October 2010, the monthly U.S. goods and services trade deficit decreased by 13.2 percent to $38.7 billion when compared to September 2010. Exports for the first 10 months of 2010 were up 17 percent over the previous first 10 months of 2009. This could be an excellent sign for franchising your business worldwide.
Any franchise system seeking to franchise internationally should access the International Trade Administration through the U.S. Commerce Department for information that will help with the decision-making process. The ITA also offers a wealth of knowledge with regard to cultures, economic conditions, trade compliance and more. Trade missions are always being formed to go to selected countries as well, matching companies with prospective franchisees. In addition, the International Franchise Association has comprehensive profiles of countries on its Web site, www. franchise.org , to help you get started.
Margaret McEntire, chairwoman and founder of Candy Bouquet International, Inc., is a member of the IFA board of directors and named IFA’s 2010 Entrepreneur of the Year. She can be reached at 501-375-9990 or