Ready to take your franchise overseas? Read this first
Australian businesses have long been lauded for their history of global franchise success, from likes of fitness studio F45’s international dominance to the success of smoothie empire, Boost Juice.
But global success is not just a case of taking a profitable domestic model and replicating it tenfold overseas, it requires extensive knowledge and a firm understanding of your business’ market value.
“First and foremost, you’ve got to understand your brand, what makes your brand different, why you are always going to hang on to it, why you are confident about it,” Ernesto Ferreira, business development director, Blue Coral Concepts told Inside Franchise Business.
“It’s about understanding your challenges. For me, “this brand won’t translate”, is more a case of “we did a bad job of getting it to translate”. It’s not about changing your brand, because initially you need to be confident about who you are, it’s about educating the local consumer.”
Ferreira’s is a man who understands how to take a franchise to a global audience, having held the reigns as CEO at Nando’s Worldwide Licencing and COO at Nando’s International, in addition to launching a number of fresh-to-market offerings.
In recent times, the South African native has partnered with former QSR Holdings CMO, David Ovens to form Blue Coral Concepts, an Australian based association that facilitates franchise development and growth.
In October, Inside Franchise Business reported that local QSR, Ribs & Burgers had initiated franchising operations, with Blue Coral Concepts overseeing the domestic and international expansion efforts.
Two months on, we caught up with Ferreira to discuss how he plans on developing the brand and asked him to share his tips on turning a domestic franchise business into a global franchising success.
“It’s all brand education. Whether it be your paraphernalia, what are you putting out in the press, the host at your door, you need to explain what you are,” Ferreira said.
“People don’t want to feel stupid, they are always looking for new places to go and even if they enjoy their meal, but they leave not understanding what you are, that’s a risk. You need to nail that piece.”
When approaching a global market, the idea of brand education becomes all the more important, particularly as the expansion moves further from metropolitan regions. Franchisors don’t always get it right, and it’s certainly not a one-size-fits-all approach, Ferreira said when speaking about his past experiences in South-East Asia.
“I opened 12 restaurants in Singapore, the first four restaurants we opened in downtown Singapore and we hit it out of the park,” he said.
“We paid the first restaurant off in nine months, and we thought we couldn’t do anything wrong, and then we started in what we call the heartlands of Singapore. All of a sudden, the brand wasn’t translating. All it was, was a different consumer set that weren’t early adopters, didn’t understand the concept, and needed to be family orientated. It was really a case of staying true to ourselves and making small tweaks, as opposed to completely changing the brand.”
The lessons he’s learned are helping Ferreira steer Blue Coral Concepts’ latest venture, Ribs & Burgers in the right direction, remarking that the brand’s strong set of values prompted him to get involved.
“Obviously the brand we’re really excited about now is Ribs & Burgers, because it’s simple and people get it. You order at the counter, there’s free filtered water, we’re about thick-shakes, we’re about burgers. The science is in beforehand making sure that you’ve clearly defined that to the people that you want to like you, that should be liking you, and how big that segment is.”
“Everyone talks about same value sets, it’s the truth, it’s the foundation,” Ferreira said when talking about finding the right partners to help grow a franchise internationally. “This industry has a vocabulary, and you very quickly pick up when you do business with people globally, that that vocabulary is universal.”
While getting the right partner on-board early is key, Ferreira urged franchisors looking to expand internationally to make sure they set parameters regarding their model, expectations and obligations prior to enlisting someone to help.
“When you invest your capital in a business and take it through the stage of incubation, make sure you’ve got the economic model right and you’re churning out the right level of cash before you bring in a franchise partner,” he said. “With Ribs & Burgers, we’re still somewhat flexible as to how that’s going to work and allow us to be able to grow out the business, but we want to make all the mistakes first.”
Advocating a clear line of communication between franchisor, master franchise owner and franchisee, Ferreira suggested that once a franchise partner is brought on board, it is critical that all brand objectives and goals are clearly and regularly identified.
“Enough cannot be said about the right level of chemistry and once you have that right level of chemistry, both partners, as in a relationship are really clear with what the aspirations are.”
For Australian businesses looking to expand internationally, certain markets present more lucrative opportunities than others.
“I think there is a very close link with Australia in South-East Asia, it feels right that that’s the first place we truly grow, although that presents some unique challenges, whether that be taking advantage of how they approach people, how that needs to be dealt with, and similarly, how you interact with the landlords in Singapore,” Ferreira said.
An in-depth analysis of the proposed location’s demographics, social and economic influences must be undertaken prior to engaging a partner, followed by a deep market dive.
“If I looked at place, consider if you are engaged with the right partners to develop market mapping, who your customers are and how many of those customers are in that market,” Ferreira said.
“They would then further define your estate plan, where are we going to open first? Why? How are we going to grow it? Out of those parameters, if I look at products, regulatory factors are really important. Can I import meat into this country?”
While domestic success provides an excellent platform to base global expansion on, Ferreira said there is no global guarantee for success, instead, franchisors should be willing to adapt, innovate and continue to reassess the market on a regular basis.
“Australia is quite forward thinking; the Australian consumer is quite progressive, and I think, internationally Australia is under-punching in terms of its subset of brands, whether it be QSR, fast casual, casual or even bistro.”
“A franchisor can either be didactic; with a tough-love approach or corporate tactically; where you move from one division to another, consult internally and troubleshoot things. It’s about bringing big business thinking to what is currently a very small business.”