Updated: Mar 22, 2019
Internationalising your brands sounds sexy. For the brand owner, you’ll land some easy money from franchising and enjoy a glamorous global jet-setting lifestyle. For the local operator, you buy a brand name, that means you put it above the door and it’ll pull the crowds. The franchiser providers the menus, the training and tel you what you need to do to make event more money. You can buy a villa with a swimming pool and live the dream. Simple, right? Well, maybe not!
In this article, I’ll share with you some of the tips and discussion shared on stage at the Global Restaurant Investment Forum KSA event, where I was joined on a panel by Samer Al Kawashki, CEO of Qoot, a Saudi based hospitality management company with many international brands licensed for future growth; and, Walid Hajj, Chairman, Cravia Inc. who franchise and operate many brands in the UAE & KSA, including Five Guys, Cinnabon & Seattle’s Best.
Doing your homework
You only need to look at Dubai to see the consumer demand for international brands in the Middle East. While home grown concepts are growing, there is still big scope for bringing an established concept into the market. With it are a number of eager franchise partners. These come in all structures and sizes, as do the opportunities. At the event we were told the key to getting started was doing your research. Analyse market needs, gaps, the consumer tastes for foreign flavours and styles of operations that suit the operation. Think about the availability of real estate, the skills of your team and other market factors that may affect your business flow. Create a feasibility study with an experienced agency we were told.
Some of the considerations in KSA is a growing cost of labour, relatively high costs due to the need of importing much of your food and drink and the associated costs of training and higher pay rates, linked to the Saudization nationalisation or Nitaqat system.
Once you’ve done your research, it’s time to look for a potential brand. For someone that has run brands and represented brands from Europe, my advice is don’t think it’s going to be easy. Our panelist’s highlighted two ways of working, one was to work with agents or consultants who will help analyse the market, finding great brands, they may provide more credibility with any approach to brands. If you know the origin market you are looking for brands, you could work with consultants there. The other is to do it internally, analysing industry news and trends through online research and then visit destinations. This will be more long winded and may lack the context that will help you make a good decision. Both parties talked about how they have also come across brands on their own travels, quite organically, but this is very much by chance.
Great brand owners will have almost weekly approaches from potential franchise partners who want to take them to a new country. You need to remember that franchising may not be on their radar, or part of their strategy or they might not see the approach as legitimate.
Build a relationship
Once you’ve started conversations with potential brands, it’s vital you build a relationship. Like a marriage, this is going to be a long term relationship. Both businesses need to get to know each other and work out if you can work together. This will often come down to personalities.
The guidance as to spend lots of time together, talking through all the scenarios. Remembering that relationships are always easy through the good times, but become tough when their is pressure, that will come later.
Once you believe you’ve found the right brand and the relationship feels right, it’s time for the all important legal agreements. You will need to remember that most brands will want some commitment to roll multiple sites in your region. Interestingly, many international brands are starting to split the KSA market from the rest of GCC, or are selling country by country territories - rather than the whole of the GCC, which was traditionally the case.
The proof is in the pudding
Going back to my original comments about this being easy, let’s be clear, it’s not. It’s going to be tough. Opening any new restaurant business is hard, especially with multiple partners involved into a new regions with time differences and travel involved. It will be easier if both partners have franchised before and know the nuances. If you haven’t give it time and allow lots of time to get it right. Remember that the company will want to ensure their brand is best represented and it will be a learning curve, with friction.
Our expert panel said that it’s this ideally you want someone who knows the brand supporting day to day at the beginning, not just periodically. In deals I’ve been involved with, an experienced GM and chefs from the brand may work alongside the local manager for a good few months to get in right. In the case of established franchisors with lots of units, it may be far better documented and the support may be less.
Localisation comes with trust
Localisation is required for most brands, this needs to be negotiated and well championed. In the case of Saudi Arabia, that will mean menus changed for Halal products, no alcohol and with the experience, it has often meant separate seating areas for families, although it was fascinating to see and hear about this changing rapidly.
As you go on your journey you may find more that you feel should be changed. The brand owner will likely push hard against changes, encouraging purity of brand. It is important to discuss and find ways that you can maximise trade while respecting the brand you are working with. This will come with time, understanding and respect.
The biggest piece of advice our panel gave is remember it’s your business and you need to work hard to get it to work. What the franchisor is providing is a great framework, a reputation and much of the work already done. You now need to get it firing in your country!
Expect hard work.
First published in Caterer Middle East, February 2019.