Expanding Your Franchising: Tips for Crossing Borders
By Ned Levitt | September 1, 2011
Quick service and family casual restaurants have a broad appeal and are able to expand to multiple locations within a particular market and beyond. An expansion will often take the restaurateur across a border, whether country, state or provincial. The restaurateur will encounter some or all of: differing laws, costs for labour, construction and equipment, market demands, cultures and languages. All of which can exist in an expansion across even a provincial border, i.e. the Ontario/Quebec border.
Having worked hard to establish the best working model in the home market, some owners are shocked to find that such expansions sometimes end in disaster. Why is that and how can it be avoided?
The starting point has to be the question: Are you ready for such expansion?
Many a failure is traceable back to the lack of sufficient resources, be they financial or human, to handle the extra burden of dealing across a border. Internationally or in farther flung markets within a home country, the restaurant owner will encounter greater travel costs and extra costs in establishing solid supply chains locally or across borders; possibly greater marketing costs, costs for foreign market research for adaptation issues, translation costs for agreements and manuals, legal costs to protect trademarks and comply with local laws, etc., etc., etc.
Market research comes up as the next big consideration.
Assuming that everyone in the world loves your concept as is can lead to big disappointments. Before entering a new market it is essential to determine if the concept needs to be modified or even whether or not the concept is welcome in the new market.
People run businesses, not machines.
Having the right people to do the required jobs is critical in any business, whether domestic or foreign. However, the skill sets for international expansions, in many ways, are different than the skill sets for purely domestic business. One reason for this is that, internationally, the restaurant owner is dealing with cultural and possibly linguistic differences that are sometimes deep and complex. If your people do not understand the nuances of the foreign market, the chances for failure are that much greater.
While there is no magic formula to follow to assure success in any business endeavour - and certainly not for cross border expansions - there are tried and true methods of approaching such expansions that can maximize the restaurant owner's chances for success and avoid predictable disasters. The best part of all is that it is not rocket science or a mystery. Rather, it is based on careful thought and planning, reasonable expectations, measured growth and solid business practices.