Prevent costly mistakes with a focused, informed strategy on which countries to target
International expansion is complicated, exciting, difficult and ultimately rewarding. Sounds great, right? Unfortunately, the biggest hurdle arises before you even begin: where do we go?
With almost limitless opportunities, concepts must devote ample time to researching various markets in order to determine which is right for them. When you make the leap to expand to other countries, there are many factors that should be driving your strategy and preparing you to enter new markets.
Not all markets are a good fit
You have a brand and system that works in your home market, it must work everywhere else, right? Wish it was that simple. The problem with “everywhere else” is that it’s not your home market. Even the slightest cultural shift could mean a big disaster for your international expansion efforts.
Take a serious look at the gravity of the journey you are about to embark on and be ready to roll up your sleeves for some good old-fashioned research on each potential market to determine culture, language, demographics, product need, and much more.
Franchising’s history is full of concepts and products that have failed abroad due to their brand name, product delivery, or even their core business practices. Before starting the research process, there are several key questions you should be asking about each potential market. Each and every one of these questions and the hundreds more can impact how well your brand is received.
- What are the differences in culture, language, religion, traditions, landscape and climate?
- How will your brand translate into the market?
- Will the local culture embrace your brand?
- Do your points of differentiation mean the same thing in this new market?
- Do common practices of your brand violate any cultural norms of the potential market?
The research process is the most critical step
Start first with a list of countries that you believe would be a good target for expansion and ask yourself two questions: Why do we want to enter this market? Is there a need? These are loaded questions that can take any well-intentioned franchisor down a rabbit hole, but should act as THE starting point.
You need to begin with an understanding of the culture and traditions as well as addressing if there are local options that would signify a need for what you offer. Do your initial market research online and through in-market contacts like local consultants and/or government agencies. These local allies are a tremendous resource that can help identify what pitfalls may lie ahead.
Making assumptions that your brand can enter any market without being sensitive to local needs is a surefire way to set your brand up for failure. This knowledge is vital to prioritize which markets to target and where to begin the search for the right franchisee.
Other key questions to consider in the research phase:
- Are there any obvious hurdles that may be too tough to overcome? Avoid wasting precious resources if there is an obvious misalignment to the brand and new target market.
- Does your concept make sense in the market? For example, you wouldn’t bring a bar to a non-drinking country, a luxury concept to a market with low disposable income, or an “eat-with-your-hands” food product to a country where cultural norms require a knife and fork.
The list is endless and missing these in your initial research can be a costly mistake.
There is no substitute for local knowledge
Once you have determined there is a potential fit for your brand in an international market, it’s time to get local. The best place to start is by utilizing the many government programs available that introduce brands to new markets abroad. Securing local consulting relationships can also help build your understanding of the local culture and assist you in securing the right prospective brand partnerships. Further, gain first-hand insight into the new consumer base by visiting the market and directly evaluating the need, competition, and potential areas of focus.
Once the appropriate target markets are decided, take great care in securing the right franchise partnership. Seek partners with local market knowledge and operators that will help you enter the market. One unit doesn’t make a market splash, so have patience to find the partner that will help meet your short-term market entry goals as well as your long-term expansion plans.
Preparedness and patience are key to survival
Taking the time necessary to understand the eccentricities of each new market will set-up the brand for a warmly-received market entry and years of long-term success and expansion. The world is a small place and global expansion is within reach for those willing to develop a careful and strategic entry to new markets.
ABOUT THE AUTHOR
Justin Livingston is VP of franchise development of ONE Cannabis, a U.S.-based cannabis franchisor. A Certified Franchise Executive (CFE), prior to joining ONE Cannabis, Livingston was the Vice President of Global Development at Coyote Ugly Saloon for four years, developing the international franchise program as well as launching their franchise brand in new markets around the world. Livingston is also the founder of Franchise Transformations – a franchise consulting firm that specializes in all aspects of franchising, including helping create robust franchise programs from existing independent businesses.
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