International Franchising ”Essential tasks for US brands planning to develop and grow their franchise internationally”

Since 1999, I have been very fortunate to have been affiliated with US food and beverage brands operating in more than 9 countries. I have supported brands that have averaged $200,000 a week without alcohol sales (alcohol is not allowed for sale in some countries) supporting an outstanding P&L at +25% net profit.

Conversely, I have seen brands with big development plans and large support fail miserably in international markets.

Consequently, I offer up some tips to US franchisors before making the international leap.

1. Visit Your Future Franchisee’s Market: A) Research macro business trends and restaurant trends in the selected market B) See what kind of ingredients supermarkets carry as this will help you understand if you need to make some items from scratch and what could sourced locally. C) You can also talk to local food distributors & educate yourself on exporting US foods. D) Check with local authorities to find out what ingredients are prohibited in the local market.
2. Elevate Your Design: Be ready to up your game with architectural design. Simple, inexpensive, and fit-out finishes won’t be accepted by local customers and your future franchisee will have a hard time acquiring new locations. 
3. Maintain Product Integrity: Stick to exporting food from the US especially in the beginning. During one engagement where I was recruited to oversee a fast casual chain of 22 stores in 6 countries, we settled on a ratio of 80% US food and 20% locally sourced food after exploring and testing local market food items. Guest satisfaction and sales grew drastically as guests appreciated US ingredients. In general, the US has more developed food manufacturing and higher food quality than any other country in the world.
4. Protect Your Identity: When I operated Applebee’s in Dubai, UAE, I made certain a stores look and feel was very similar to stores located in the US. We played American songs; our TV channels aired US programs and we frequently trained our staff on proper English communication skills. Staying authentic was appreciated by our guests. To further explain, if you are operating a Chinese concept, you wouldn’t  ask your staff to wear US type of uniform or play non Chinese music or TV programs.
5. Do Not Be Fooled: A rich, well capitalized prospect franchisee, does not mean they will be successful with running your brand. Find out the level of success with their other businesses, and interview some of their staff. Many very well capitalized companies have a short term focus without attention to brand integrity and overall quality. One company I knew with multiple US brands switched most of their ingredients to local products to realize some savings but in turn resulted in below average food quality and taste, negatively impacting sales and P&L.
6. Upfront Development Fees: Let your franchisee pay for at least 50% of development fees upfront. Why? If they only pay for one store, and when they open the 1st store, if they are not profitable, they will not be incentivised to adhere to the pre-agreed upon development targets.
7. Key Hires: Make sure you have a voice in interviewing and hiring, especially the operations manager or brand leader, who will be running your brand internationally. After all, he or she is your brand ambassador and they must be quality driven, training focused, maintaining and promoting high standards so your brand will reach its highest potential.

 The above are a few essentials, based on my experience, to help maximize a brands international success.

I would like to hear from you. Please share your comments.  What other tasks, tips would you add?

My regards,

Marvin Alballi

Vancouver, BC

Canada