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Branding Australia

Written by Donna Bennett

This article appeared in Issue 3#1 (November/December 2008)
of Business Franchise Australia & New Zealand

alt Almost a third of Australian franchise systems have international operations, contributing millions of dollars in export income. Donna Bennett talks to four home-grown franchisors about taking their brand overseas and the benefits to Aussie franchisees.

The Australian Trade Commission (Austrade) reports a recently large increase in international activity for Australian grown franchises, especially as systems mature and franchisors look beyond a relatively small domestic market for future growth prospects.

Austrade divulges that international franchising opportunities have never been greater, with more and more markets opening up and franchising being just about universally accepted as a way of conducting business.

Although franchisors can develop their brand internationally by direct entry, area development and/or joint venture agreements, master franchising is the most popular avenue.

Founded by Janine Allis, the first Boost Juice Bar opened in South Australia, in 2000. Boost is the largest and fastest growing juice and smoothie chain in the Southern Hemisphere, with around 187 stores in Australia and 36 internationally.

Boost has appointed master franchisees in the UK, Ireland, Portugal, Thailand, Indonesia, South Africa, Macau, Mexico, Hong Kong, Chile, Singapore, Malaysia, The Baltics and the GCC (Middle East).

Jacinta Caithness, CEO International of Boost Juice Bars declares: “We’re growing faster internationally than we are in Australia but from a domestic franchisee’s perspective, the strength of their brand just grows.”

She says Boost’s global expansion was deliberate: “We knew there was going to be a point, domestically, where we reached saturation. We also knew we weren’t going to be happy just looking at Australia. With our brand, it’s just so transferable into so many different markets around the world.”

Jacinta says master franchising was the way to expand overseas, “It was the best way for us to maintain an element of control without compromising our domestic ‘cash cow’ - we could never do anything to compromise Australia.”

Boost had no initial plans to attack the US market, because its biggest worldwide competitor is Jamba Juice, with over 700 American stores. “For Australian franchisors, you really have a choice – either going into America or tackling the rest of the world”, explains Jacinta.

“It’s not that we didn’t want to ‘take them on’, but we thought in terms of order, it’s better for us to focus our expansion strategy internationally on the other continents, rather than going straight into a market which is already very juice and smoothie focused.”

However, the opportunity to expand in the US is simply too large and exciting to ignore. Boost is now actively considering its options to launch into the American market.

In 2004, Boost arranged for various forms of data to be compiled into a matrix, to reveal the most attractive countries to take their brand overseas. However, Boost had to then match those results with the countries that were actually showing an interest.

Being an Australian brand, Boost was not well known overseas and so it commissioned Austrade to locate suitable partners. As a result, in November 2005, Boost signed their first master franchisee in Chile, South America.

Jacinta says the initial stages are paramount with master franchising and it does take time: “Setting up is everything. It took us a good 18 months of physical research and strategy, but then it came in a flurry because of all the activity we had put upfront.”

Boost alters its product range around 25-30% for each country. In Chile for example, Boost sell a custard apple product, which is their number one selling smoothie. In Indonesia, there’s a demand for avocado juice. In Asian countries, Boost is not positioned as ‘grab and go’, because consumers prefer to sit and enjoy.

A local partnership is imperative says Jacinta, “We know our brand better than anyone, but they know their country better than what we will. It is truly a meeting of the minds.”

Howards Storage World is a one-stop shop for storage and organisation solutions for the home and office. Franchising in Australia since 1998, Howards also operates throughout Singapore, The Middle East (GCC Territory), Spain, New Zealand, the Philippines and Ireland. There are around 65 stores in Australia and 20 overseas.

Dirk Spence, CEO and co-founder, explains Howards was also proactive about international development: “Obviously we were successful throughout Australia. In 2004 we decided to consider our potential to go overseas, identifying the lack of our concept internationally.”

Dirk explains that already having a master franchise model in place meant they could take it anywhere. “We decided to master franchise South Australia and Western Australia, because of the distance. You need separate manuals and so on, but the model was really there to then expand overseas.”

Dirk confirms why Howards embarked overseas, “Australia only has 20 million people and there is a big world out there. If you identify the need for your concept and the lack of it elsewhere, and you are prepared to invest in the necessary personnel, time, money and planning to take your model elsewhere, then the benefits can be enormous. Once you’ve got each of those masters developing their area, that’s how you get expediential growth.”

Going global is also good news for Australian franchisees, says Dirk: “Our buying power from manufacturers and suppliers has obviously increased enormously because of the stores opening all around the world.”

The biggest challenge says Dirk, has been locating the right individuals to act as masters: “It’s not an easy ‘fish’ to find. You’re looking for people who have good business acumen, the financial capacity to take on such a thing and be a good mentor to their franchisees.”

Dirk admits airline advertising has been particularly beneficial in finding master franchisors, “We find ‘in flight’ magazines work very well for us.”

Howards are often approached directly and that’s okay says Dirk, as long as they are suitable: “We weren’t planning on going to the Middle East, but because a big corporation came to us and they fitted the bill, we took them on.”

No country is really off limits, says Dirk, “Providing you feel that it’s not a danger to your staff to go there and set up and so on, and there’s a potential of the market there. We’ll give them the information and listen to their business plan. The best laid plans don’t always work out, but you do need to have a plan.”

Dirk admits Europe is a place of interest: “A continent with people in very confined living spaces, the need for the product and lack of our concept. Having said that, if someone comes from Egypt tomorrow and it looks good, then we might go down that track.”

Dirk has an answer for people who ask why Howards think their product range will work in another country: “It’s not for us to say whether it will work or not; it’s for prospective master franchisees to do their business plan.”

Trios is a relatively young Australian sandwich wrap franchise that was launched overseas last year. Founded in 2003 by brothers Elias, Sam and David Elia, Trios has 11 stores trading in Victoria and one in NSW, with many opportunities still available across Australia.

A master franchisee was secured in the Middle East and five Trios stores are currently trading, with another 10-20 expected across Riyadh, Saudi Arabia, Dubai and Kuwait. A further 25 company stores across the US and China are intended, under the banner ‘Trios Fresh’, as a result of a joint venture agreement with a US partner. Master franchises for regions within the US are also planned.

Sam Elia, Chief Marketing Director, comments on expanding overseas before flooding the Australian market: “People have this conception or this fear that we’re ‘stuck’ in Australia. If we venture overseas they ask ‘Why are you going there? Why don’t you go to WA?’. And I say ‘What’s the difference?’.”

Sam comments on the challenges: “International expansion and the learning that goes on in terms of cultural changes, from recipe changes to menu applications etc, has been a great asset to us, because it’s allowed us to think a little bit wider.”

Sam discusses what they look for in a partner, “When we look at who we’re dealing with, they have to be like-minded. If your partnership is good and you have the right logistics, structure, marketing and supply systems, then it’s about being able to work with somebody.

“The US people are very open; they’ve got bigger ideas than what we originally thought. When we went there, we thought we were going to sell a master licence, but they’re interested in bigger things. That’s opened our eyes.

“We’re building more of a café environment for the first store in Houston. The Americans want to do a restaurant drive-through, so we’re designing that at the moment.” In fact, Sam says Trios are spending over $200,000 on design alone: “We want to look at the business in its total format and develop everything about it that international partners will apply for their demographic.

“We’re designing three levels of stores – the café drive-through, the stand-alone street and the food court environment – all over the world. We’re breaking down every part of the business, as far down as the trays we hold our bread on and the cutlery box. We want to develop it at its finest point so if we take it to Thailand or Singapore, the only changes we need are some menu changes.”

Sam says Trios is set for further growth, receiving around 15 international enquiries per week: “We’re in discussions with a very large organisation that owns an airline; as well as lifestyle and leisure venues. We’re also talking to several groups in Spain, Portugal and Japan.”

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In just four years, ecowash mobile has grown into the world’s number one mobile waterless car washing franchise, with over 100 mobile units in Australia, the Middle East, Europe and the USA.

Jim Cornish, Managing Director, declares: “When people consider expanding overseas, they may think ‘someone’s going to write me a massive cheque and they’re going to do all the work’. But if you love your brand and you believe in what you do and you want it to be successful, that’s not the way it’s going to work.”

Two years after the business was founded, ecowash signed a joint venture deal, as a result of an invitation by an overseas consultant to conduct a series of meetings.

Jim explains: “Using the Middle East as an example, a joint venture company is a really good way for us to enter very culturally diverse markets. Without a local partner, I think it’s very hard to understand the culture, understand the lifestyle issues that you face - and our business is very lifestyle based.

“Obviously the culture should have quite a big impact, but we’ve found we can pretty much walk into any market and the model is 90% there - we just have to adjust a few little things here and there.”

He says there are advantages with English speaking countries: “We own the USA 100% and manage it ourselves as a separate entity - the language is the same and there’s one currency.”

New Zealand is a different model again, says Jim, “That’s a master franchise. Essentially we feel we can manage New Zealand as we would, say, Western Australia.”

Jim insists, “You can’t go into another country and be the foreigner; you can’t go to the US with a Head Office in Sydney, Australia.”

He says having a Californian office has made a difference to American franchisee interest, “They like the fact we’re Australian but they want the security of knowing we’re established and serious about their country. When they make a telephone enquiry, they’re in the right time zone and someone with an American accent answers the phone.

“There’s been a lot of hard groundwork – and I think that’s the thing when you’re looking at international expansion, as much as you’d like to think there is, there is no quick answer. You really have to understand the market.”

Jim sums it up: “Our overseas expansion gets a lot of attention in Australia. That’s good for our Australian franchisees because from a consumer point of view, people obviously have a lot more confidence. When they know that not only has this business survived in Australia, which is probably the toughest market to survive in, but now they’re overseas.”