The secrets to going global
The rewards to be gained from achieving international growth are exponential. There are however plenty of hurdles and obstacles to overcome along the way. The Franchise Magazine shares some of the secrets that brands are using to prosper rather than perish.
To a good many people the internationalisation of a business is a key barometer of its success. While it is true that not all businesses or brands seek out this supposed ‘holy grail’, with a good many being more than happy to solidify their presence in their home market, the fact remains that a brand name with a proven ability to flourish in numerous territories or regions does carry significant clout and stature.
The same principle holds true within the world of franchising. Therefore it will come as exciting news for franchisors that several high profile reports, notable from analysts FRANdata and the 2014 Small Business Lending Matrix and Analysis, suggest that franchising is poised to achieve its fastest rate of growth in five years in 2014.
This of course translates into greater capital flowing into businesses and increased investment towards being funnelled into new markets.
The strategy of investigating and expanding into untapped markets of potential growth is hardly a new one, and to some international franchising is seen as a relatively smooth and easy process. That is not to say that challenges do not exist and many a brand has faired less well than expected in the past. So how is that the most successful franchises have succeeded where others have failed and just how optimistic are franchisors that this year will herald the next phase of sustained international growth?
“Our first foray into international expansion came in 1999 when we received an inquiry about entering the Namibian market,” explains VIP Bin Cleaning Managing Director, Mark Harvey. This was by no means a planned event, yet it was the success of this endeavour that allowed us to devise a model that we subsequently build upon when later venturing into other regions and territories.”
For Mark and his team the success of VIP Bin Cleaning’s expansion into Namibia gave them not only a sense of confidence that internationalisation of the brand could be achieved, but also a new sense of appreciation for the wealth of growth opportunities that do exist out there. “Hard as you try,” Mark continues, “it is immensely difficult to sit there and accurately predict which market you will be entering next. In fact the truth in most cases is that the key to successful expansion is more about finding the right person who has the passion and commitment to spearhead your brands’ international growth. This is invariably more important than identifying a particular market to move into.”
Successful, rapid international expansion is today one of the hallmarks of a truly successful global brand. Arguably this is most true when it comes to food and drink businesses, where to many the power behind a McDonalds, Burger King, SUBWAY or KFC is derived from how many locations it has in as many different countries as possible.
Of course, for brands that lack the sheer size of the above names, but are no less worthy of their status in the marketplace, international expansion has nothing to do with prestige and everything to do with growing as a business, particularly from a financial point of view. For Morelli’s Gelato, the journey to international expansion began with it identifying the lack of quality gelato options in various parts of the world. In these places, what people generally considered as being quality ice cream was far removed from gelato.
“As irony would have it,” owner Bibi Morelli states, “it was around the same time that we were looking into taking the brand international that we started to receive our first inquires regarding franchising. In the subsequent months we grew on an international scale at a gradual pace. This allowed us to ensure that, no matter where we set up a franchise, we never once compromised on the quality of our product.”
Entering and establishing a brand in a new market will always bring with it unique and, at times, unexpected challenges. However, Mark, Bibi and countless other franchisors have the experience behind them to know how to avoid the major pitfalls that can come with international expansion.
“It is my honest opinion that so long as you combine both a viable market destination with a suitable individual who has the determination to drive your plans forward and succeed, and has the necessary levels of flexibility and adaptability, there isn’t a hurdle or obstacle that a franchisor cannot overcome,” Mark says.
“Every market will have its own unique cultural and business standards that one must adhere to when establishing a brand there for the first time, but to me that it is all part of the fun and excitement,” Bibi enthuses. “What is important is that you enter with a simple, profitable concept to work from, and combine that with the right franchise owner. At the same time it is essential that you remember that it is all too easy to rush into these sorts of ventures and set yourself up to encounter problems down the road. By taking your time and selecting your franchise owners and partners carefully such issues can be avoided.”
So, when it comes to the successful international expansion of a brand, why is it that franchising provides arguably the best model to achieve this?
Replication is at the very heart of the franchising model and thus expanding internationally as part of a franchise becomes infinitely easier than it would for an independent, stand alone brand. Granted there has to be an acceptance that, as no two markets are ever the same, slight adaptations will always need to be made, however it is my opinion that it is through franchising that brands are best placed to hit the ground running when they cross over into previously unchartered territory.”