Finding Your Brand's Balance

Franchise Development

Franchise brands must find the right balance between global standardization and local differentiation.

By Mike Kehoe

International expansion can represent enormous opportunity for brands. Consider Yum China, previously part of Yum!, which was successfully spun off in 2016 and now has a market capitalization of more than $17 billion. However, expanding internationally also has its challenges, and enjoying sustainable success outside of your home country is increasingly difficult.

Operationally, international expansion requires a different approach to logistics, labor and accounting, among other things. Beyond these operating challenges, though, is the challenge of how to “win” with consumers internationally. Today’s consumers are more nationalistic and foreign brands have less appeal than they have historically. In addition, local competition is often comparable in quality with international brands, and they “win” in terms of speed to market and local relevance.

Find Your Glocal Balance

A great example is Luckin Coffee, founded in 2017, with stated ambitions to open 2,500 cafes in China this year and surpass Starbucks in total number of outlets. To compete successfully in international markets, brands have to learn how to be “Glocal,” and find the right balance between global standardization and local differentiation.

Finding this balance is not easy and requires regular course corrections as an organization grows internationally and its business ambitions evolve. The most important requirement, however, is to be proactive and thoughtful in determining what level of balance gives your brand the best competitive advantage. To do this successfully, follow these four steps:

Define your ambition for the business.
Be clear on your brand positioning and determine the level of acceptable customization.
Create clear brand guidelines and operating standards.
Establish a process for allowing local adaptation.

Envision Success

While it is difficult to predict how successful your brand will be internationally, it is important to establish what success looks like because your ambition should drive your strategy. For example, if your ambition is to capture significant market share across multiple markets, you will need a more differentiated approach and local organizations to help deliver this ambition. 

Conversely, if your ambition is to enjoy targeted success in a few markets, then the strategy should be global standardization leveraging a centralized organizational structure. For example, Outback Steakhouse has significant market share and restaurant penetration levels in South Korea and Brazil. The brand is supported by large organizations in each market that work to localize brand positioning across key elements like restaurant design, menu strategy and social media. On the other hand, you can see the global standardization of the Cheesecake Factory where restaurants in the UAE look very similar to restaurants in the USA. Their strategies may be different, but both succeed internationally because their strategies link to their ambitions.

When deciding business ambitions and goals, it is important to define the level of customization you are willing to allow for your brand.  To do this, your brand positioning has to be clearly defined because all future decisions are grounded in that foundation. Once this is clear, the next step is to determine the allowable level of flexibility across three areas: target consumer, brand equity and key consumer touchpoints. 

Determine Brand Flexibility

Most brands allow very little flexibility with the consumer target because if that changes, the equity and consumer touchpoints need to change as well. Similarly, most brands will limit brand equity changes because if this changes across markets, then you are essentially managing multiple brands. For example, Anytime Fitness is in more than 30 markets, but they are laser focused on busy people who value their core consumer benefit of being the “most convenient gym on the planet.” 

Regarding how key consumer touchpoints are delivered, most brands allow more flexibility. For example, more than half of the sandwiches on the menu at Subway® India were developed for
their market.

Finally, it is important to note that the level of customization should change as brands enter markets where consumer behavior differs greatly from their home markets. When Auntie Anne’s launched in China last year, FOCUS Brands created a more modern store design and specific menu items to appeal to the disproportionately younger Chinese consumer.

Establish Standards

After establishing the level of brand customization allowed, the next step is to create clear brand standards and operating guidelines. While this may seem obvious, just ask any franchisee who works with different brands/franchisors and they will tell you that the quality of brand standards and operating guidelines varies widely.

It is important to make clear strategic choices and to establish how these choices come to life across all aspects of the brand, including uniforms, store design, customer service, real estate, menu offerings and pricing. Finally, it is fundamental that your brand standards and operating model generate attractive economics for both franchisor and franchisee.

The final step is to establish a process for allowing local adaptation, especially in a franchise system. For many brands, this can be an informal submission and approval process, but for some brands, it is a very sophisticated process. For example, there are restaurant brands that have online platforms where franchisees can create their local menu from hundreds of choices and submit it for approval with the click of a button. Whatever your process, remember great ideas can come from anywhere, such as McDonald’s successful McCafé® concept, which was first developed and launched in Australia.

In summary, international expansion can provide enormous opportunity for your brand, but it is increasingly difficult to “win” with consumers internationally. The best international brands have established their business ambition and then tailor their level of “glocalization” accordingly. In the end, the “consumer is always boss” no matter where you are competing, so the challenge is how to best delight them, while leveraging global scale and standards within the dynamic world in which we live and compete. 

Mike Kehoe has spent the past 20 years developing brands internationally with Procter & Gamble, the Coca-Cola Company, Bloomin’ Brands and FOCUS Brands where he is currently the International President.