Taking the appropriate steps to ensure that you have the right partners and the right processes will ensure your success and prevent failure.
BY MICHAEL A. BERGER
As a relatively young franchisor which only began franchising in 2008, Elevation Burger was fortunate in that its brand and products were discovered and admired by businesspeople from overseas, primarily the Middle East, during their U.S. travels. The level of interest in organic, grass-fed beef that also happens to be “halal” (Arabic for lawful or permitted) at slaughter is very high in the Middle East, as might be expected. The fact that Elevation Burger was a new and fresh brand was also appealing to those in the Middle East. As exciting as our international development has been, there are however, certain risks that are inherent in how any brand is executed and implemented by its foreign partners and how the brand is ultimately conveyed to the local consumer base.
STEPS TO CONSIDER
Here are several steps that Elevation Burger has found helpful when franchising abroad:
- Partner with the right person/group. Not every franchisee who approaches you to build internationally is well suited to execute your standards from thousands of miles away. Make sure you work with someone who shares your vision and passion. Franchisees who have spent significant time in the United States either in schooling or through business tend to understand the U.S. franchise structure and business models the best. Franchisees with exposure to the U.S. market are highly important in overseas development.
- Ensure you have a thorough training program for international franchisees to follow that is in excess to that required of your stateside franchise partners. We typically require a training program for international franchisees that is three times as long and three times as in-depth as those required of our domestic partners. Unless you a large franchisor with deep resources, it’s unlikely that your corporate staff can spend as much time in international markets assessing the operational and marketing success of your franchisees as you do domestically. Therefore, international franchise partners for growing brands should be able to be somewhat more self-reliant than your domestic partners.
- Understand any trade barriers of bringing your specified equipment and product into the country of destination. Each country has very different trade, customs and tariff requirements. Some can be very costly (certain countries can charge more than a 100 percent tariff fee on incoming equipment or certain supply products). Know the market that you are entering and make sure your franchisees know the trade requirements and limitations of their home country.
- Solidify your supply consolidator relationship to bring your U.S.-based products ashore. It’s highly unlikely that you can source all equipment and supply materials to exactly your brand specifications inside of a foreign country. Much of the equipment that your restaurant uses is likely only produced in the United States. Further, many of the supply ingredients that your brand uses may not be available locally. There is always the possibility of sourcing locally later, but we have found that to replicate your brand to exact standards, at the least for the first couple of restaurants in a new country, your brand and your franchise partner are best served by bringing in product directly from the United States.
- Ensure an excellent open line of communication with your franchisees on their progress during construction and operations ramp up. The last thing you want is have your opening trainers arrive in another country and find that your restaurant is not ready. The airfare costs associated with getting your staff to and from another country and the visa process for some countries is quite onerous. You do not want your staff to arrive and discover a store that’s not ready for training as it adds cost to your franchisee and drains corporate resources.
- Maintain regular communication, even if not in person, with your franchise partners abroad. Just like your domestic franchisees, franchise partners abroad look to your corporate entity as a support organization. Clearly the level and type of support they need will differ from your domestic partners, but it does not mean that you can run their partnership with little or no support.
Franchising abroad can be very lucrative, exciting and a great opportunity to expose your brand to a worldwide stage. However, taking the appropriate steps to ensure that you have the right partners and the right processes will ensure your success and prevent failure.Michael A. Berger is managing partner with Elevation Franchise Ventures, LLC. Find him at fransocial.franchise.org.