Is your small business ready to expand? Here are four questions every franchiser should ask before taking the leap.
In 1996, Magnolia Bakery opened as a small bakeshop on a tree-lined street in New York City’s West Village. It was the quintessential mom-and-pop storefront, complete with fresh-made cakes on the windowsill. Before long, the bakery stole the hearts of local foodies, who waited in around-the-block lines for a taste. But for most, it was a cameo on the HBO series Sex and The City that took the bakery to icon status.
So it comes as no surprise that the company, which currently has corporate-owned stores in select cities throughout the U.S., announced in July that it would be selling international franchises.
“We were getting about one franchise request every day, five days a week, for the past four years,” Magnolia owner and CEO Steve Abrams says.
The move will increase the brand’s global footprint, he says, while also allowing the bakery to maintain a degree of its home-grown authenticity.
But before going the international franchise route, there are a few questions a small business owner should answer first.
1. Which market is right for your business?
“Your first step is to target the right countries and figure out which ones make sense,” says Rick Bisio, franchise consultant and author of The Educated Franchisee.
If you’ve already received interested party inquiries, like Magnolia’s international enthusiasts, you may have found a location worth scouting: “Local interest is a good indicator of where a concept will work—pay attention to leads coming from a country,” Bisio adds.
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Once you’ve determined where, examine the local consumption of your product and potential competitors.
“If there is competition in a country that shows there’s demand, but if it’s too strong the local brand proprietors may be too well entrenched to compete with,” he adds.
2. Who should you hire?
“If you really want to be serious about international, you need one or two people within your domestic organization that are 100-percent dedicated to international from an operational point of view,” Bisio says.
But it’s not just your local team that calls for careful selection—your foreign team is crucial to your success as well.
“Culturally, geographically and even from a capital perspective, it’s almost impossible to go out into the world and understand the market properly,” Abrams says, adding that this means you’ve got to find the right franchisee that knows the local market.
Abrams says Magnolia is placing such a high value on the team that its prospective franchisees will determine their first foreign locations.
3. How can you protect your brand?
It’s important to stay true to whatever made your brand a success in the first place. Magnolia says it will continue baking all of their goods on site—whether the franchise location is in Sao Paulo or Tokyo.
“We aren’t looking to be a Starbucks bakery. We want to keep the brand equity at a high level. You don’t want to be too ubiquitous,” Abrams says.
Bisio encourages owners not only to protect their equity, but protect the brand as an entity in and of itself.
“You have to protect your logo, word mark and actual trademark. Some countries are first-to-register and some are first-to-use. Your logo or word mark may not be available, so as quickly as you can in any target countries, you have to protect your brand,” Bisio says.
4. How can you customize your business for a foreign market?
Everything you do domestically is going to have to be tweaked to reflect the reality of a foreign market.
In addition to adapting to foreign laws that might be different than what you’re accustomed to working with in the U.S., Bisio says to make sure you are willing and able to translate and adjust your entire purchasing system, operating system, marketing system.
“Everything needs to be, at minimum, translated, but the reality is it should really be customized,” he says.