International Franchising And What It Means To You

As I travel around the world with clients, I can''''''t help but notice how familiar the retail signs are becoming in all parts of that shrinking world. As just one obvious example known to countless millions we have the golden arches now in 118 countries and they claim to have over twenty eight thousand outlets (sorry, I just can't call them restaurants although McDonalds loves to describe themselves that way!)

Whilst the American fast food giants, the sixties may have pio-neered international expansion by the sale of franchises, Australia and many other countries have caught on fast. I recently attended the Mexican Franchise Show and surprise, surprise, not only was I very impressed with the quality of the home grown franchise systems on display but there, scattered amongst some very big internationally known franchise brands were some quite small Australian franchise systems.

On discussion with those exhibitors proudly showing the Aussie flag, I found I was talking to the Mexican Master Franchisee and those country owners of the intellectual property rights from 'down under' were in turn, merrily seeking to find sub franchisees to buy a bit of Mexico to operate their own little business. These franchise systems are not huge by international standards when compared to your KFC and Subways, but obviously they are aggressively expanding overseas and Mexico has already been conquered! Some of these include Cartridge World, who offer a simple refill of ink cartridges, Bark Busters, a franchise system that teaches your dog better social behaviour and Aussie Pooch Mobile, which pampers your favourite pet by the franchisee dragging their specially fitted out bathtub trailer out to your home to shampoo and rinse it as often as you like.

That vibrant and very noisy Mexican Franchise Show was a real eye opener for me. It had over 240 franchisor exhibitors and over the three days it ran, it attracted at least 30,000 people all looking for some type of franchise system that would get them started down their own path to independence and no doubt escape from a boring job; or maybe they were just keen to start a new life doing something for themselves for a change.

The point I am making here is that you could spend your days wandering around the world going to a franchise show like that one I visited in Mexico as there are these types of franchise business opportunity shows being held in every major capital city you could name.

Last year I was with an Australian franchisor client Yai, attending the Singapore Franchise Show. He runs a very successful (and the oldest] Thai Restaurant in Surry Hills Sydney and there we were in Singapore seeking master franchises for that proven food concept for all the countries of South East Asia. The potential franchisee attendees at that show thought it was very funny that an Australian company was taking Thai food back to Asia. Rather like that old saying 'taking coals to Newcastle!' However when those same curious potential franchisees talked to my client about what he was doing and of course the profits his model restaurant is making, their interest level overcame any initial skepticism they may have had.

The simple fact is you can franchise any type of business! Yes you sure can! Just look around you they are popping up everywhere. Franchising is a very sophisticated marketing tool that knows no international boundaries. So what's hot, people ask me. Garry, we know you have been in franchising a long time and I am sure you see trends.

What we do see is a growing and steady trend to even greater levels of niche marketing. Here are just some obvious examples. It's a proven fact of life that we are all growing older thanks to drugs and better hygiene. Well there are a growing bunch of new franchise systems that effectively care for the elderly in their own homes. For instance there are now fitness gyms that cater to particular age groups such as the over 50s

Instead of offering a hairdressing salon franchise [and yes of course there are plenty of them around] now we see haircutting for kids, where they get to play computer games which keep them from wriggling out of the chair!

The type of business and how far you can take it is really only limited by our marketing ingenuity. I keep telling my franchisor clients, 'why stop with Australia?' There are only twenty million people here and it's a tough country to do business in. There are huge distances between each capital city, 80% of us live in six cities, transportation and communication costs are high, so if you can get it right here why not keep expanding overseas!

Just starting with large pockets of English speaking countries you have the UK with its 60 million people,Canada has 32 million and the big momma, the golden rainbow and home of franchising, the USA has 300 million. Just think how many territories are out there waiting to be divided up and sold!

We have lots of overseas franchise systems eyeing Australia and the best way of entry into any new country is to sell a master franchise. That is someone, probably a high net worth individual who can come up with the large initial investment to buy those rights or even be an established company looking for a diversification which will set up a separate division to run the franchise.

Some members of the Penfold family with a long history in retail stationery in Australia have progressively bought three master franchises and run Kwik Kopy [Print Shops] Signwave (Sign Shops) and Express Personnel Services to do just that. You might ask, well why didn't they just set up their own Print Shop rather than paying for the rights to do so to some company based overseas? I guess they figured those companies already had proven business systems and they saw that by acquiring the country rights they could quickly sub franchise and generate a better and more secure return on their investment that way

We are currently assisting an Australian client who is what I would call a high net worth individual (that means he has a few bob] who is looking at acquiring the Australian master franchisee rights to a certain type of fitness centre. He will pay a lump sum up front to acquire the exclusive rights to the whole of Australia and then he will need to open up his own first fitness centre to get a hands on feel for this specific type of business. Within 6-12 months he will then be looking tosell you a sub franchise. That means there are three legal entities in the marketing brand chain. They are the overseas franchisor who has the ultimate ownership of the brand name (think golden arches), the master franchisee who has the exclusive rights to the country [Australia) and the sub franchisee who is managed by the master franchisee and runs their business in a small territory, which could be a cluster of post codes or std telephone zones.

Are we going to see more international franchising? Yes, absolutely. Australia has some 1500 franchisors that we know about and I bet that at least 200 of them are, right now, standing in some overseas franchise show seeking to sell a master franchise. Then there's all the franchise systems that have been home grown in Mexico, Canada or just about anywhere you care to name. They too are looking at international expansion opportunities, so we really do live in a time of amazing business opportunities for the brave of heart.

Some people say to me Garry, the trouble with franchising is that it's making the world the same! You can buy the dreaded McDonalds just about anywhere and yes it's true, the shopping centres here look the same, with the same brand names offering various stuff. My reply is that the customers must like it because they are the ones making that growth happen and it's the product or service consistency they like.

Are you master franchisee material? If you are brave, look to what's going on overseas and bring a new name to the market here. Gloria Jeans Coffee is a classic example. The two Australian individuals who bought the Australian rights for this retail food concept from the United States [the franchisor was not all that big in the USA) have developed it into a giant in Australian Shopping Centres. They have made such a great job of it that they recently bought out the USA parent company and are now selling master franchisees in other countries having become the franchisor themselves. A classic case of the mouse that ate the lion!

If Barkbusters, a small franchise system that came to life out of Dapto near Wollongong in New South Wales, can claim to be marching around the world teaching dogs not to bark and annoy the neighbours, just think what you could do with the right advice and some get up and go!

Franchising knows absolutely no industry boundaries. Businesses are franchising just about every type of product and service you could imagine. As I always say, McDonalds did not invent hamburgers, they just happen to have packaged and marketed them better than anyone else.

It's up to you to decide. Are you a franchisor type willing to become a self appointed leader and create a brand that franchisees will want to operate under and in so doing accept your leadership and be willing give up some of their natural independence? If so how far do you want to take your business formula? I personally can claim to have made a lot of my franchisor clients extremely wealthy as their brand has continued to grow. As just one small example, Fernwood Female Fitness Centres had just one modest Centre in Bendigo Victoria when I launched them as a franchisor. Today they have 65 Centres and are growing almost every other month and the owners enjoy a very healthy cash flow. Now they are talking about international expansion and I say why not!

I went to Mexico with Howards Storage World, another Australian specialty retail franchisor client who I also launched from a base of just one small shop in Northbridge Sydney. They now have 50 shops and have sold their first master franchise in Singapore. Franchising is exciting and the success of a professional franchising system is based on offering the public great service. To do that the franchisor must have quality franchisees and train them continuously on how to increase their share of the local market which each one of their services.

Maybe it's time you got cooking. Call me, I would love to find out if I can help you put franchising on your agenda. We set up franchises as a total turn key system and also at the other end of that scale, help people evaluate buying them.

By Gary Williamson of Which Franchise? Magazine