There can be many pitfalls in overseas expansion, so it is wise to take precautionary measures to avoid them.
As a franchisor, expanding into foreign markets is an exciting prospect, but one that does not come without its own unique set of challenges. Diversifying your regional footprint can reduce your business’ dependence on domestic markets.
As members of franchise organizations, we’re always hungry for growth, growth, and more growth, but there can be many pitfalls in overseas expansion, so it is wise to take precautionary measures to avoid them.
At Slim Chickens, we’ve found that utilizing a master franchisee to handle overseas franchising to be the most successful way to expand abroad.
It’s easy for us as a franchisor to believe that the success we have generated domestically can be easily replicated internationally, but this would be a faulty line of thinking. We have to be sensitive to cultural differences, especially in the food service industry, where customs and traditions vary greatly.
Experience: absolutely necessary
At Slim Chickens, the first thing we look for in a master franchisee is a high level of experience. We want to see that they already have their own existing systems in place and are capable of doing their own development. When we partner with a master franchisee, we’re not just absorbing their ability to attract and vet prospective franchisees. We are, in effect, absorbing their knowledge of local communities, economies, consumer trends and cultures.
Being aware of global trends and policy will also make your job a lot easier when expanding internationally. Want to open a franchise in the post-Brexit United Kingdom? You’ll need to be aware of what kind of supply chain disruptions have occurred after the U.K. formally left the European Union. There’s no one who knows how to account for policy shifts better than the business people who work in those markets every single day.
To be aware of what global developments mean for business on the ground in foreign countries, it’s best to develop a robust network of contacts and business leaders whom you can turn to for advice. That local knowledge can help reduce costs by minimizing mistakes that might otherwise be made by a foreigner making their first foray into the market.
It’s critical to partner with highly experienced and reliable franchisees from the get-go when expanding into foreign markets. Be sure that these initial franchisees are knowledgeable and experienced business people. Taking those first steps into an overseas market might feel like taking a plunge into the abyss – but a smart, reliable overseas partner can steady the ship.
As franchisors, we all know how to properly vet prospective franchisees. But your overseas partners are going to be doing a lot more for you than just operating your local franchises. You’ll want them to be your eyes and ears on the ground, providing updates on market shifts and identifying future areas for expansion.
Know the competition
Be sure you do a considerable amount of research on your foreign competitors. We all know our domestic competitors like the back of our hands, but you might not know anything at all about those on the other side of the pond. Carefully study what makes them successful, and if they too are a domestic company gone international, pay close attention to how they adjusted their business to meet the demands of international markets.
“There’s no one who knows how to account for policy shifts better than the business people who work in those markets every single day”
It is worth considering whether you want to outsource certain aspects of your expansion to ensure that all local policies and regulations are being adhered to. Supply chain, trademarks, accounting and tax preparation are all complicated enough already, but adding foreign policies and procedures into the mix can cause some real headaches. Passing off administrative functions to established local firms can help your team stay focused on the task ahead of them.
Some companies will even establish a “beachhead team” on the ground ahead of their expansion. Establishing a beachhead team gives the franchisor more control over day-to-day operations, and also can give peace of mind to those at the home office knowing the operation is in trustworthy hands. At Slim Chickens, we prefer to go the route of partnering with highly-experienced groups who already have a foothold in our target markets.
All of this means that you’ll be putting additional responsibilities on the stakeholders within your business. Going global is not an undertaking that should be taken lightly, and it’s wise to make sure team members are on board with the extra workload and prepare them to confront the challenges that come along with expansion.
If your business is a consumer-facing one, it is also wise to lay the foundation for your expansion by getting local influencers on board. Send them your product and have them start circulating the word to increase brand awareness. When it comes time to open up shop, local consumers are already familiar with your brand and will be eager to engage with it.
But don’t feel like you need to slow-walk your introduction to foreign consumers. An all-out marketing blitz can drum up excitement in ways that an incremental approach could never accomplish.
Expanding your franchise into overseas markets can be a risk, but by partnering with trustworthy, established operators, that risk can be largely mitigated. Then, the possibilities for growth are limitless.
THE AUTHOR
Jackie Lobdell is the vice president of franchise development for Slim Chickens, a U.S.-based better- chicken concept.
