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Thursday 11th August, 2022

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Adapting to New Markets
Adapting to New Markets

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Adapting to New Markets

Don’t expect your successful f&b brand to work as well in Seoul as it does in Seattle. Menu adjustments can be necessary but how do you get this right – and how far can you go before you damage your brand? Brian Duckett is your guide

Don’t expect your successful f&b brand to work as well in Seoul as it does in Seattle. Menu adjustments can be necessary but how do you get this right – and how far can you go before you damage your brand? Brian Duckett of The Franchising Centre is your guide

Anyone who has ever been involved with taking their franchise to another market knows that things will be different there. We’ve all heard the naïve and inexperienced say “If it works in Paris, Texas it will work in Paris, France” when the facts are that even if it does work in Texas it might not even work in New York.

Tastes are different, laws are different, opening hours are different, wage levels are different, property costs are different, cultural traditions are different even between the individual states in the USA or the member countries of the European Union. Even within the UK, tastes move more towards sugary and fatty foods when a brand moves north from England into Scotland. Why then would anyone expect them to be the same when the move is to a completely different continent?

When planning menu items you can throw in the further complication of the local availability of ingredients and the reliability of the supply chain. That’s why it’s usually a far more preferable option to find a local partner with local knowledge to help with planning and implementing the move into a new market. They could be an employee of the franchisor’s subsidiary company or joint venture, or they could be a company with a management team that becomes the master franchisee or developer. Whatever the structure, local expertise is essential.

Brand standards

The challenges come when the local partner becomes the tail that wags the dog. It’s easy for that party to over-stress problems that are to their advantage to stress, telling the franchisor all sorts of reasons why this, that or the other needs to be changed. Before you know where you are the products and services delivered in that country bear no relation to the brand standards which the franchisor is trying to establish on a global basis. Even the colours in the logo could change!

What then is the answer to the question “How far do you go?” Not in distance but in changes to the system. Whilst local tastes and preferences are important, let’s not lose sight of the fact that the franchisor may be trying to create a new market for their new food, educating the palates of the local population and turning them on to new culinary experiences.

Depending on the motivation for international expansion, the ideal solution is for the franchisor to be a lot more involved in the set-up of operations in the overseas market than they often want. Like it or not, many fledgling international franchisors are more interested in getting an upfront fee than they are in building a global brand or creating an ongoing relationship with the local entity. They are not the people to whom the following comments are directed.

Having done at least some due diligence with local food and franchising consultants, and the respective lawyers, a development plan will have been agreed and a management structure put in place. The priority now is to get a unit or two open and to operate them as closely as possible to the franchisor’s original system, bearing in mind any glaring changes that became apparent during the due diligence.

Greater reward

In an ideal world, the franchisor would own and manage these pilot operations, taking the risk themselves but possibly creating the opportunity for even greater reward when later selling the master franchise for a system that is by then proven to work in the market. After all, who knows better how to operate their unique system than the franchisor?

Franchisors rarely have the financial or human resources to afford to do this, so the local partner opens and operates the pilots but they should be in very close touch with the franchisor while doing so. At least one permanent member of the franchisor’s staff should always be present so they can personally see what menu items are popular and what changes need to be tried then accepted or rejected. The additional costs of this need to be built into the franchise agreement but so be it.

Whilst it’s the actual food items that are presumably the most important elements to the consumer, their retail price and their cost to the operator are also critical factors that have to be constantly reviewed. In every market there will need to be substitutes for whatever reason. Local presence of franchisor’s staff will ensure that these substitutions are done for the right reasons. Once one or two units have been going for a year or so then all the necessary changes should have become apparent, the system and the operations manual can be appropriately amended, and full-scale rollout can commence.

As with most things in franchising, there isn’t a ‘right way’ to adapt a system but there is probably a ‘right way’ for each business. It will take longer and cost more to get it right than anyone first thought but if each party is themselves adaptable then the long-term benefits of success will far outweigh the early delays.

ABOUT THE AUTHOR
Brian Duckett is Chairman of The Franchising Centre, Europe’s leading firm of franchising consultants. The Franchising Centre co-ordinates an informal network of franchise practitioners which has representation in more than 40 countries worldwide. He can be contacted by email at brian@thefranchisingcentre.com

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