The Japanese franchise market is highly receptive to all kinds of franchise business; both from Japanese companies, as well as international brands looking to sell the master franchise rights to a local expert, or expand throughout its many enticing islands. It’s truly one of the most attractive franchise markets in the Greater Asia region.
This is thanks to a number of factors that have elevated Japan to a leading international business market. Its franchise industry is experienced and varied, with the Japan Franchise Association reporting last year that around 1,339 franchises exist in the country, composed of 263,490 individual locations.
Many large American brands have identified the benefits of fostering franchise relationships within Japan, and have launched successful Japanese franchise networks that now rival those in other prime global markets. Wendy’s Japan, for example, left the country in 2009 due to middling success, but wasn’t finished with this Asian gem. In 2016, the brand partnered with First Kitchen to launch co-branded Wendy’s First Kitchen locations; popular sites that serve both concepts’ menus in one restaurant.
Should you bring your franchise to Japan? What kinds of businesses do well in the country? To find out this and much more, read on for our comprehensive guide to the Japanese franchise market.
How to franchise in Japan
Becoming a master of the Japanese market means learning what works and what doesn’t, as well as what kind of prospective franchisee profiles you should be looking for when entering the country.
You also need to have an understanding of the main Japan prefectures, which each boast impressive GDPs and populations that would entice even the most reserved international franchisor. Many cities in Japan foster successful franchise networks, but knowing which works best for your brand could be the difference between exponential growth or a swift return to your domestic market.
Tokyo, Japan, for example, is the undisputed center of government, business, higher education, media, fashion, and culture in the country. Trends originate in Tokyo, and there is a dense concentration of high-earning consumers ready to invest and purchase. This would be a popular first choice for franchisors looking to find a master franchisee in Japan for the first time, but be wary that competition is fierce due to the region’s high population and demand.
And don’t forget that Japanese consumers are especially diligent about the kind of businesses that they choose to engage with.
“Every entity is free to do business in Japan. However, goods and services undergo the rigorous selection of Japanese consumers, which I think are the most rigorous in the world,” says Hiroyuki Ito, executive director of the Japan Franchise Association.
“Trends move fast, and a company that attempts to survive in the Japanese market must pursue the current favorites of consumers. Japanese customers also tend to check the safety and security of manufactured commodities.”
Some brands, such as Carl’s Jr, have managed to overcome the discerning nature of Japanese consumers by building it into their development strategy. As Ned Lyerle, president of CKE Restaurants, explains: “It is important to understand that the Japanese consumer has very high expectations in terms of food quality, taste, dining experience, and service.
“For Carl’s Jr’s entry into Japan, we created a new ‘urban industrial’ restaurant design to elevate our in-restaurant experience to the same premium positioning that our brand delivers with its menu and service system. The new design and launch were well received in the market and we have high expectations for the future in Japan.”
Best franchises to open in Japan
Everything from convenience stores to gyms, and many different kinds of food chains, can do well in Japan if managed correctly. Snap Fitness, for example, has a growing Japanese footprint and continues to open fitness centers throughout the country.
Krispy Kreme Japan, meanwhile, launched back in December of 2006 and has grown ever since, with upward of 45 stores throughout the country.
Even Dickey’s Barbecue Pit, a brand with deep Texas roots, recently announced it had signed a franchise agreement to open in Tokyo in 2021. At the time of the announcement, Sunsheng Lin, owner of local master franchisee Seikou Co. LTD., said: “With God’s assistance, I’m proud to bring Dickey’s to the Japanese consumer. It will be my utmost priority to manage this brand dutifully and have my team deliver the American spirit that Dickey’s portrays. My ultimate goal is for Dickey’s to be present in every city in Japan.”
There are lots of different kinds of domestic franchise opportunity that foreign franchisors compete with, but this hasn’t stopped them from growing to rival even the most established local businesses.
Important considerations for your Japanese franchise business
The sale of franchises in Japan is made easier when you understand the nuances that make this market tick. While its consumers are highly receptive to international brands, not just anybody can enter Japan and find themselves inundated with success. It takes determination, patience, and preparation.
“In the short term, an aging population requires goods and services which give consideration to the elderly. Concretely, narrowing is the key for the aged, whose scope of activity is restricted,” says Hiroyuki Ito.
“A mass marketing strategy is outdated. In the long term, depopulation is another issue. This causes a labor shortage, and the Japanese economy will be influenced by the acceptance of foreign workers. Franchising will maintain growth, even in that situation, because it is a win-win business development model.”
It’s often assumed that etiquette and manners carry considerable weight in business relations among Japanese and international business people, but this shouldn’t be overstated. That being said, there are still a handful of important aspects to remember.
“What I would stress is punctuality,” continues Ito. “This is, of course, a basic business manner all over the world; in Japan, though, punctuality is indispensable. The Japanese don’t like ‘being late’ or ‘missing deadline’. A person who cannot control time won’t be able to win trust.”
