Bartercard among many franchises to attend Global Franchising and Licensing Expo

In September, 10 Australian franchises participated at the Global Franchising and Licensing Expo in Singapore under an Australian pavilion coordinated by Austrade and supported by the Franchise Council of Australia .

Bartercard , Cartridge World , Gloria Jean’s Coffees , Granite Transformations, Howard’s Storage World , Kwik Kerb and Retreat Franchising all took stands in the Austrade pavilion, with Conference Online, Natural Springs Australia and Paradise Retail Holdings taking up non-exhibitor Austrade packages at the exhibition. VideoEzy , Expense Reduction Analysts and Franchising magazine also took part in the exhibition.

Austrade representatives from Jakarta, Bangkok and Kuala Lumpur attended the event, bringing with them potential franchise buyers from Indonesia, Thailand and Malaysia.

“Over recent years, GFL has successfully positioned itself as a key event for franchising in South East Asia,” says Maurine Chong, regional senior trade commissioner for Singapore, Malaysia and Brunei.

“Austrade sought to mirror this regional approach and the initial response we have had from Australian franchises that attended has been overwhelmingly supportive.”

In addition to having a presence at the exhibition, Australian participants in GFL received briefings on the four key franchising markets in the region, presented a seminar on their systems to potential buyers, had customised appointment programs with identified buyers from around the region and attended special networking events.

Australian participation was characterised not just by the quality of the systems, but by the diversity of the products and services on offer.

Shane McCarthy, national group retail manager for Paradise Retail Holdings, who represented group companies Pets Paradise and Billy Baxters , was impressed by buyers seeking good business opportunities.

“The Westernisation of retail in Asia means almost anything from Australia could work,” he says.

According to McCarthy, he met quality potential master franchisees from all around the region and within one week of the fair had buyers booked to visit Australia to see the systems.

“We went to GFL to put a toe in the water and now we’re forced to rethink our total growth strategy,” he says. “We met good quality buyers – big thinkers who could foresee multistore models and were not phased by our rollout plans.”

McCarthy says being in the region had given him the chance to also undertake retail inspections, adding that given the convenience of the markets, in many ways taking on a South East Asian market is akin to expanding to another state. However, he notes that different buying patterns and the issue of volume sales and retail concentration need special consideration.

Michelle Wade, Austrade trade commissioner to Kuala Lumpur and regional team leader for franchising, says Paradise Retail Holdings’ experience was not unique.

She says the Singapore, Malaysia, Indonesia and Thailand markets all have special features and idiosyncrasies which need to be considered, but all countries offer excellent prospects for Australian franchises seeking to expand overseas.

“The entrepreneurial spirit across the region is high and the middle class in all of these countries continues to develop, so there are excellent opportunities for Australian franchises across the region,” Wade says.

“Every product and service is different, but with research, careful positioning and astute partner selection most successful and established Australian franchises could find a market in ASEAN.

“All four of these key markets have ongoing and excellent engagement with Australia. We have strong links with all markets and Australia’s intake of international students from the ASEAN region is seeing the emergence of young entrepreneurs with a particular fondness for and familiarity with Australian brands.”

FCA chairman Stephen Giles also attended Global Franchising and Licensing.

“This is the first time Austrade has positioned the fair as a regional event and FCA looks forward to working with Austrade to further develop this model for franchise promotion in the region in the future,” Giles says.

He believes the regional approach to GFL was a cost-effective way for Australian franchises to investigate and gather initial business leads in ASEAN.

Giles also cautions Australian franchises that are beginning to promote into any overseas market, advising them to be sure that they have trademark protection before widely distributing materials.

So while the South East Asian market is buoyant, the message from the FCA and Austrade is for franchise system owners to be optimistic about the region, but also aware.

Michelle Wade stresses the need to carefully investigate markets, their regulations and the backgrounds of potential overseas partners before establishing a franchise system overseas.

“In addition to protecting trademarks and intellectual property, the key to success is appointing a good partner and correctly positioning or adapting the system for rollout overseas,” she says.

Singapore, for example, appears to be a relatively transparent and liberal market to operate in. With landlords and consumers always looking for the next new thing, the challenge for Australian franchise systems is the responsiveness required to maximise and maintain growth. Franchises need to be willing to rollout new products on an ongoing basis to service consumers’ hunger for something new.

Thailand, Indonesia and Malaysia are all markets experiencing strong growth in franchising and Australian brands are beginning to make inroads. However, Austrade representatives from both Thailand and Malaysia stress the need to carefully assess and review rollout plans and fee structures.

“Australian companies should carefully consider how they devise their rollout plans and establish franchise fees in these markets,” Wade says.

Thailand, Indonesia and Malaysia, all rapidly developing markets in ASEAN, have consumers ranging from the wealthy to subsistence compared to Australia, Singapore, UK and US where markets are overwhelmingly middle class and easily translate to per capita buying patterns.

There is still a good deal of the developing population in Asia that has limited buying power. This proportion is not a target market and should be excluded from short-term calculations in rollout plans.

“In their enthusiasm to get a brand, sometimes the local franchisee doesn’t take this into account and they work to the Australian market calculations,” Wade says.

“One of the benefits of using Austrade is that we work as a cultural bridge and can see both sides. We can often see patterns and get companies to compare or investigate how other similar brands may have entered these countries.”

Following the initial success of GFL 2005, Austrade and the FCA intend to use the 2006 event as the Australian industry’s key event in South East Asia.

Access more information regarding buying a franchise and running a franchise.