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Your next franchise location: Scandinavia

Your next franchise location: Scandinavia

Beautiful landscapes and welcoming locals populate this exciting, dynamic region. Will your franchise join them?

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Known for its unparalleled levels of happiness, inarguable sense of sleek design, and unrivaled tranquility; Scandinavia is an idyllic region without compare. Its people are known to be polite and welcoming, and the overall quality of life – whether in Sweden, Norway, or Denmark – is second to none. However, are these picturesque Nordic countries as receptive to franchising as they are to hospitality and communal coffee breaks?

A UNIQUE LANDSCAPE

The first thing to appreciate about Scandinavian countries is the huge landmass, small population, and wide distribution of potential customers that a burgeoning franchisor will have to contend with. Young companies coming out of the region are born global, as their native markets aren’t sizable enough to guarantee continued success. They must perfect aspects that any business would have to consider, such as sourcing goods, or setting up efficient logistics – aspects that could cripple franchisors entering the region without preparation.

Even the giants of franchising aren’t immune to faltering within the Nordics. Scandinavian neighbor, Iceland, first got a taste for the golden arches when McDonald’s entered the country back in 1993. The beloved restaurant franchise operated with mixed results for just over a decade, before having to close its doors in 2009. This was partly due to the financial crisis of 2008 that shook Iceland’s economy more than most, as well as a meager population of 300,000. Importing goods, however, was a key blockade for the brand; despite having seen success previously in over 115 countries around the world.

Speaking to the BBC at the time, previous franchisee, Jon Gardar Ogmundsson, said: “We have never been this busy before, but at the same time, profits have never been lower. For a kilo of onion imported from Germany, I’m paying the equivalent of a bottle of good whiskey.” If obtaining essential goods and materials is proving tricky, it doesn’t matter how attractive your concept is – it just won’t work.

“You have to be smart, and use your money wisely”

STAY HEALTHY, STAY HAPPY, STAY HYGGE

So what does work in Scandinavia? What do its unique people and distinct culture value above all else?

The answer, it seems, could lie in the often sought, Danish state of wellbeing: hygge.

Hygge goes well beyond a coffee by the window, watching the rain fall down the glass. It’s more than a crackling fireplace, or a cool mist descending over the mountains. Hygge is a cultural focus; an allencompassing approach to life that determines motivation, relationships, and business. “In other words,” says Meik Wiking, author of The Little Book of Hygge, “what freedom is to Americans, hygge is to Danes.”

Naturally, Danes, Swedes, and Norwegians can’t all be grouped under the same hygge umbrella. Just because a franchise thrives in Denmark doesn’t guarantee its success across the North Sea. But understanding what Scandinavian markets value, culturally, will help franchisees to position their product or service in a way that doesn’t alienate the locals.

Wellbeing and sustainability are vital. Take the Swedish burger icon, MAX Burgers, for example: with 120 restaurants worldwide – including four in Norway and one in Denmark – this ecofriendly frontrunner encompasses everything unique about the Scandinavian approach to fast food franchising. Foreign passersby might dismiss its menu of chicken, beef, and veggie burgers as pedestrian, but look a little deeper and the franchise really starts to shine.

MAX Burgers started in 1968 as the first burger chain in Sweden. In 2008, it became the first fast food franchise to carbon label the entire menu; letting customers know the exact impact their food would have on the environment. All products are labeled with CO₂e information, and the goal has always been to be “100 per cent climate neutral”. This means planting trees in Africa to offset MAX Burgers’ climate impact – a worthwhile aim, and one that has won the brand immense favor well beyond its Swedish origins. In fact, the brand recently received the Global Climate Action Award from the UN for its positive climate impact. If Scandinavian restaurant-goers want to maintain both a personal and holistic sense of hygge, through ongoing care of the earth, then they turn to MAX.

FINDING FIKA

When understanding the Scandinavian franchising landscape, there’s a Swedish term just as crucial as the Danes’ hygge: fika. Often (wrongly) translated as just “a coffee and cake break”, fika runs much deeper. It’s pivotal in marketing a concept to the Swedes, and in understanding why one method that worked in the Texas might not work in Stockholm.

Fika is an attitude, a mentality, and an approach to life that cannot be ignored. It’s a sense of community; a time to slow down, to reflect, and appreciate those around you. Even businesses as ubiquitous as Volvo have institutionalized fika, which has led to improved productivity and strengthened business relationships.

“See market localization as a strength, rather than something that is diluting your brand”

A poster child for fika in the Swedish franchising space is Wayne’s Coffee: the international brand bringing excellent coffee and even better company to caffeine addicts around the world.

Wayne’s is aiming to be the go-to spot for the “ultimate fika experience”, and do so with cozy decor and home-baked treats. Like MAX Burgers, Wayne’s Coffee strives for environmental responsibility with biodegradable cups, and organic teas and coffees.

“The whole concept of fika is to take a break from your day, sit down, and have something sweet with your coffee,” says Adnan Karim, managing director for Wayne’s Coffee in the U.K. “Even if it’s a quick fika, which is 15 minutes, or a traditional fika, which is maybe up to an hour long. That works in Sweden.”

The fast-paced, grab-and-go culture of a city like London doesn’t translate this Swedish sentiment quite as successfully – something brands coming out of Scandinavia have had to adapt to. “In the U.K., we’ve found that the demand from customers is for something even quicker. They don’t want to wait for somebody to warm their food,” continues Karim. “So we’re bringing the grab-and-go element to our offering, which Wayne’s Coffee doesn’t really have anywhere else in the world.” Brands entering Scandinavia may have to adapt their offering to suit the market, but franchises heading overseas from the Nordic region have just as many changes to consider.

ADAPTING TO SUCCESS

As with any location, thriving in the Scandinavian market requires franchises to adapt their offering in many ways. This is the case with O’Learys; a Bostonian, Irish-themed bar franchise that began in Gothenburg, Sweden in 1988. The O’Learys concept of an American sports bar in Europe – complete with non-stop football on the TV and as many chicken wings as you can manage – has certainly proven successful, but the brand has had to work to establish itself in markets untapped by its American-Irish home-away-from-home aesthetic.

“We always make some adaptations to our offering, depending on the market we’re entering,” says Darren Wainwright, chief expansion manager for O’Learys. “We add local food to complement our product mix, and adapt the sports offer to suit the local market. Depending on local popularity, we also tailor the range of activities we offer.” O’Learys found great success in the late nineties, when sports broadcasting was starting to take off in Sweden, but American football doesn’t appeal worldwide, and U.S. bar snacks aren’t universally adored. In Hanoi, the franchise’s menu includes pho, and in Istanbul, more basketball is shown than at any other location – these are just a couple of examples of the changes O’Learys has made to ensure its continual growth.

“No matter how strong your concept is, or how great your products are, you can only become successful if you find the right partners to work with”

It’s hard to adapt to a new market unless you understand what’s appealing, of course; something O’Learys has also considered with its rapid expansion. “Identify strong international partners and grow with them,” explains Wainwright. “See market localization as a strength rather than something that is diluting your brand.

FEET ON THE GROUND

Having a knowledgeable master franchisee who can direct a concept toward local success is a method also used by JYSK, the Danish retail franchise with 200 franchised locations across 25 countries. The brand found success by offering affordable furniture to a wide market, and has seen immense growth far beyond its humble beginnings.

“My advice is always to find the right partner,” explains Frederik Kaare Kroun, franchise director for JYSK. “No matter how strong your concept is, or how great your products are, you can only become successful if you find the right partners to work with.” Success isn’t a foreign concept to JYSK, which has more than 2,800 stores around the globe. Its franchised locations might be a minority, but they remain a crucial part of the brand’s growth. As to why a Danish brand has seen such worldwide acclaim, Kroun says: “I think that Nordic companies have a reputation for great design and an honest way of doing business. Scandinavian living is popular.”

FRESH OPPORTUNITY

The most exciting part of Scandinavian franchising, for both brands emerging from the region, as well as franchises hoping to enter this unique market, is how new the concept is. Bar a handful of legacy brands, franchising as a business model has only taken off within the last decade; regardless of whether you’re in Denmark, Norway, or even the most populous Scandi country, Sweden.

Domino’s Pizza, for example, only began franchising in Sweden in 2017, and currently has six stores in the country; primarily around the city of MalmÖ. KFC entered the country in 2015, and also only has six locations. Scandinavian countries are receptive to international concepts; they just have to be handled correctly, and bring a whole heaping of hygge for good measure.

ABOUT THE AUTHOR

Kieran McLoone is the deputy editor for Global Franchise.

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