Beyond Borders: Global Franchise Expansion Is Within Reach
For the franchise concepts that do their homework, the world can be a small place and the global opportunity can be life changing.
By Justin Livingston, CFE
Global franchise expansion can seem like an unattainable goal. There are typically more questions than answers when beginning to contemplate the sheer size of the global market and it can be hard to know where to begin. Within the franchise industry, the world is becoming a smaller place as more franchises look to position their brand for global domination.
With ease of communication and technology, growing global tradeshows, marketing opportunities that target cross-continent audiences, reaching potential franchise partners half-way around the world has never been more possible. The idea of taking a local, home-grown brand and expanding to markets abroad is exciting but international expansion is not for the faint of heart. Success is dependent on a company’s willingness and commitment to be prepared.
The idea of building brands that transcend borders and oceans is becoming increasingly attractive to franchise brands. Consider what it will take to become a global leader and what you can do to position your brand to stand out from the crowd. It’s imperative to seriously reflect on your level of preparedness to go abroad as well as contemplate the resources you are willing to commit to the mission. For concepts that take the time to prepare, get educated, and go forward with a strong, intentional, well-planned strategy, the potential is almost limitless.
The execution of global expansion takes both time and a considerable amount of resources before signing the first franchise agreement. The following topics should be front of mind as you begin to plan your expansion or even if you have already made the move across borders and are looking at your next phase of development.
What are my motivations for looking beyond my borders?
Why? This is where your journey begins. Your motivations for global expansion should be carefully considered before looking into a strategy for taking your brand across borders. Are you considering an international strategy for the right reasons? Are you looking to build brand recognition, increase streams of revenue, diversify to better help ride the economic turns of a particular market or markets?
These are all positive, proactive reasons to expand globally. Many brands find themselves feeling pressured to make the move to international business before they are ready because it’s trendy, other concepts are doing it, they see a short-term pay day, or they are reacting to interest from a potential buyer. These short-sighted, reactive reasons for expansion can spell disaster not only for your global brand, but for your core business at home as well. There are many reasons to take a brand international; identify your goals and resources and determine if it’s the right strategy and right time for you.
A well-thought-out and prepared international franchising strategy can transform a company. Becoming a global franchise can lead to access to a world-wide market and allows for an increase in revenues otherwise not achievable if limited to a local market only. International expansion is a long-term plan. It gives a brand an opportunity to secure a long future full of opportunity and growth. Take your time, consider all possibilities, plan for hurdles, and move ahead confidently that you are prepared to enter the global marketplace.
Protecting what’s most important
Your brand defines you. Systems, teams, even products change over time but your story and your brand are the core of any good concept. Protecting your brand in your home franchise market can be a challenge. Finding the right franchisees and having the right team and processes in place to keep your brand safe is a major undertaking. When your brand enters a foreign market, this task becomes even more important, and even trickier.
There are many things to consider when contemplating protecting your brand abroad. Before you do anything, protect what’s most important to you -- your marks. This is one area where you should spend the time and money to have local counsel in your target countries set-up the protections you need based on local law.
Once you are protected, spend the time to understand local laws and how they may apply or even alter your business. Do you have a food concept? If so, what licensing requirements may force you to adjust your SOP? Do you serve alcohol? If so, what are the rules and liabilities associated with liquor licenses? Is your brand medical in nature, or perhaps financial?
What are the laws that will dictate how your franchisee must operate and is that in conflict with your brand identity? There are inevitably some localization issues you will have to tackle in each market relating to marketing, standard practices, delivery of your product or service, or simply how you position your brand.
By granting an international franchise agreement, you are allowing your brand to be represented in a market you don’t fully understand in a location you will likely visit far less than you do to monitor your locations domestically. This is a key topic to consider when writing your agreement, developing your operations programs, and building your International support staff.
Once you develop a program you feel will best position your brand and franchisees for success you’ll need a build a strong development program to find the best possible franchisees. You need to be sure you have enough resources to ensure their success. Your first international franchisees will be the proof of concept that will set you up for future, long-term growth into other markets. To have a successful launch, you’ll need to decide when you will be flexible and what’s important enough to your brand that you won’t allow any deviation and protect those key areas through training, processes, contracts, and ongoing oversight of the business.
Do you have enough of what it takes to go abroad?
Global expansion typically takes more resources and commitment than companies realize. Both financial and human resources will be used to great extents when developing your global strategy. Ask yourself, do you have enough? International expansion takes a team dedicated to that task. Assigning your current team to build, execute, and maintain your international program could obliterate your core business. Unless your current support team has excess capacity and the desire to learn a new trade, they are probably not your international team. Franchisees in different countries, different cultures, different languages, and different time zones are just that, different. Learning how to adjust to these differences can use a lot of resources, both time and money.
As you begin to explore operations abroad, the training and ongoing support programs will likely parallel the existing domestic programs. Much of what currently exists will need to be adapted to accommodate the differences in each market as well as localization of the product or service. Carefully consider things like what will happen if your domestic team goes abroad to open a location? What will that absence do to your core business? What needs have you not yet even considered? Seek help and advice from those who have done this and hire or assign the appropriate team of players to oversee the international program.
Will new markets require that the brand changes their identity?
If you have locations through your home market, you have likely found subtle differences from market to market. What plays well on the East Coast, may not have the same success on the West Coast. Embracing the cultural differences of each new market and country and finding how your brand will fit and translate into that market is key to success. Do your points of differentiation mean the same thing in this new market? Do common practices of your brand violate any cultural norms of the potential market?
Part of the development strategy of new markets is taking the time to gain an understanding of what will need to be adjusted and be sure that the brand is left intact. Know your non-negotiables and seek markets where you won’t have to compromise what’s important to do business there. There are countless stories of companies making bad assumptions when entering a new market; this can be both costly and devastating to a brand so exercise caution when evaluating each new market. Doing this due diligence is vital to success and will help prioritize which markets to target first.
The world is your oyster
The idea of crossing borders and introducing your brand to new markets, cultures, and audiences is an exciting proposition. When care and preparation is given to strategically and well-thought-out plans, you are setting your brand up for long-term success and bountiful brand expansion. International expansion is complicated and international growth consumes a lot of time and money but the rewards are unrivaled. Take your time, dedicate resources, plan carefully, utilize experts who have gone down this path before and enjoy all that the world has to offer.
Justin Livingston, CFE, is the Vice President of Global Franchising for Coyote Ugly Saloon and has spent the past decade helping concepts realize the potential of Global Expansion.