Franchising

Franchising Around the Globe: Powerhouses of the Asia Pacific

We were recently approached to look at an opportunity to develop master Franchisee’s for a company. The company was newly established with a limited history of operations, with this in mind we decided postpone any developments until they have a couple of years under their belt. We can still provide some support during their journey. With this in mind we decided to write down a few pointers for licensing and franchising.

Franchising has soared to unprecedented heights on the global stage with Master Licences hungry for established franchise/licence models. Its appeal lies in the seamless combination of  expertise and the strength of the brand. Over the years, the local Asia Pacific region has emerged for great potential in the world of franchising, fuelling exponential growth and attracting investors from every corner of the globe. Let’s look at the fascinating world of franchising, exploring some of the strongest performing countries, with a particular focus on the Asia Pacific region, and how this region has redefined the franchising landscape.

Before we start, let's take a quick glance at the some of the stats. On the aftermath of the pandemic, franchising has been on an upward trajectory with investors returning to the market. At the last count the IFA franchise association says it accounts for over $787 Billion in economic output, providing employment to millions of people across various sectors. Worldwide this figure is much,much more. As we are based in the APAC region we tend be more exposed for Western Franchisors looking to build on their expansion in this region. It’s and area encompassing diverse economies and cultures and is a hotbed for franchise success stories. For us the environmental, engineering and utilities sector is an area of interest.

Let's highlight some of the countries that have been setting the bar.

China: The Dragon of Opportunity. With its vast population and a burgeoning middle class, China has become a dream destination for franchisors seeking to expand their reach. The Chinese market's colossal potential has attracted a plethora of international franchises across sectors like food and beverage, retail, and services. The adaptability of global brands to local tastes and preferences, coupled with the support from master license opportunities, has led to unprecedented growth in this vast and dynamic market.

Japan: Merging Tradition with Innovation. Japan boasts a rich cultural heritage while simultaneously embracing technological advancements. This unique blend has made it a hotspot for franchise success. The Japanese consumers' propensity to embrace novel ideas and services has provided an ideal environment for franchises to flourish. Moreover, the country's well-established infrastructure and robust legal framework have fostered a conducive environment for franchisors and investors alike.

South Korea: Riding the K-Wave. The Korean Wave, also known as "Hallyu," has swept across the globe, sparking interest in Korean culture, food, and entertainment. This cultural phenomenon has paved the way for established global Franchisors to look at Korean franchisees. Riding on the back of this wave, franchisors have successfully expanded into various markets, presenting a perfect example of how a global brand can maintain its identity while adapting to local business.

Australia has proven to be an excellent market for franchisors, offering a robust economy, stable business environment, and a population with a substantial number of SME’s penchant for trying out new and innovative concepts. The country's franchising industry has expanded across various sectors, including hospitality, retail, education, and professional services. What sets Australia apart is its consumer base, which is known for its openness to new experiences and willingness to embrace international brands. With a diverse population and a strong middle class, Australia provides a fertile ground for franchise success. The Australian government has been supportive of the franchising industry, providing regulations that promote transparency and fairness between franchisors and franchisees.

Many countries which provide this regulatory framework help build trust and confidence in the industry, encouraging more entrepreneurs to take the plunge into franchising. Local governments that have also shown support for the franchising industry, recognising its potential to drive economic growth and create employment opportunities. Pro-business policies and commitment to supporting the franchising sector have played a significant role in fostering growth.

Thailand, Malaysia, Indonesia, Philippines and Singapore are more countries that deserve special mention when it comes to the franchising landscape. Having just visited Vietnam, we can also see developments across the industry. They have all proven to be promising markets for franchisors, offering unique opportunities that have attracted numerous international brands. Their strategic location in Southeast Asia, coupled with its thriving economy and vibrant culture, has made it an attractive destination for franchisors seeking to expand their global footprint. Tourism industry, in particular, has been a significant driver of franchising success, as travellers from around the world are exposed to and develop preferences for various international business during their visits. Franchisors that can adapt to local preferences while maintaining their global identity have found substantial success in this market. . With a well-established franchising associations and clear regulations, providing a conducive environment for franchisors.  Various initiatives and incentives are in place to encourage both local and international franchises to set up operations.

Asia Pacific markets are diverse, with each country boasting its unique traditions and preferences. Master Franchisees together with the Franchisors that can tailor their offerings to resonate with the local preferences  have built great businesses. The ability to adapt product lines, and marketing strategies has allowed franchises to connect with consumers on a deeper level, fostering brand loyalty.

The region has witnessed a surge in the entrepreneurial spirit, with many aspiring individuals looking for opportunities to own and operate their businesses. Franchising provides a tried-and-tested model that allows local entrepreneurs to tap into the success of established models. This win-win situation enables franchises to grow rapidly, leveraging the passion and dedication of local partners.

Master license opportunities. This innovative model allows a local entrepreneur or company to hold the rights to develop and sub-franchise a brand within a specific territory or country. The master licensee becomes the bridge between the global brand and the local market, ensuring the brand's essence remains intact while catering to the region's unique opportunities.

The master license model offers several advantages, including: Cultural Sensitivity. Local master licensees possess an in-depth understanding of the local culture, customs, and consumer behaviour and political prowess. They can fine-tune the brand's offerings to appeal to the target audience, fostering a sense of belonging and acceptance. Master licensees also bring their knowledge of local regulations, business practices, and competition to the table. This expertise is invaluable for navigating the complexities of a new market, thereby minimising risks for the global brand. By leveraging the master license model, Franchisors can rapidly expand into multiple locations within a country or region. This scalability allows them to capture significant market share in a shorter span.

The success of the franchising industry would not be possible without the financial support provided by leading banks and financial institutions worldwide. As the industry's potential became evident, banks recognised the stability and profitability of franchises, prompting them to offer tailored financing solutions to franchisees. This financial support enables entrepreneurs to access the necessary capital. It is also important from our point of view when considering franchise opportunities, aspiring franchisee’s must prioritise correct funding. Also to choose a business model that has been tried, tested, and proven successful. A tried and tested business model provides potential franchisees with invaluable assurance and confidence in the brand's potential for growth and profitability.

Seeing is Believing.

One of the key advantages of opting for a tried and tested business model is the ability for potential franchisees to witness the system in action. Established franchises often offer discovery days or allow potential franchisees to visit existing operations. This hands-on experience allows aspiring franchisees to see first-hand how the business operates, meet existing franchisees, and gain insight into day-to-day operations. This level of transparency is invaluable as it helps potential franchisees fully grasp the inner workings of the franchise and assess whether it aligns with their aspirations and values.

For franchisees who seek to expand a franchise into new territories, setting up a pilot program or centre of excellence is great way to demonstrate commitment in the region. A pilot program serves as a testing ground for the franchise in the new market, allowing the franchisees to understand local challenges, adapt the business model to suit regional preferences, and refine operational processes. The pilot program's success not only validates the viability of the franchise in the new market but also provides valuable data and insights that can be shared with future franchisees. Accredited education and training not only helps guide both employees and franchisee’s alike it also can provide a steady pool of graduates willing to join the program.

In conclusion, a tried and tested business model is the foundation of successful franchising. It provides potential franchisees with confidence, as they witness the system in action and gain a comprehensive understanding of the franchise's operations. For franchisors venturing into new territories, a pilot program or centre of excellence acts as a crucial stepping stone, ensuring a seamless and successful expansion journey. Remember, in franchising, knowledge is power, and embracing a proven business model sets the stage for long-term success and growth.

Again it’s important to note the cultural, political, economic and social differences in each country. Every franchise system should take interest in adapting to the local conditions whilst observing the legal framework. For over two decades, we have been associated with the franchising journey,  we have witnessed some of the success stories and also observed some of the failures. Originally in the UK and now connecting internationally. Our experience has allowed us to witness first hand the evolution and growth of the franchise industry. As we move forward, the franchising world will undoubtedly continue to evolve, embracing new technologies, catering to changing consumer preferences, and exploring untapped markets.