Franchise export

Australian business heading offshore has discovered the benefits of the franchising model.

The Wiggles are just so damn popular. The Wiggles’s unique combination of great songs, colourful outfits and the group’s strong educational background has helped them to go from strength to strength, not only here in Australia but also all over the world.

After gaining a great reputation as a live act, The Wiggles then turned to getting their brand into the US retail market through merchandising. Now the sky’s the limit for The Wiggles.

What is interesting is that The Wiggles model for “going global” was the franchising model rather than traditional exporting and importing.

According to Austrade/Sensis research, around 9% of small and medium sized enterprises (SMEs) who go global choose the franchising option.

However, anecdotal evidence seems to suggest that franchising may be a popular “market entry” strategy for many Australian businesses in the future. We’re already seeing some trends in this direction.

For example, take Boost Juice in Mexico, Bakers Delight in Canada and food and beverage brands like Gloria Jean’s and Cookie Man in India.

I met Jacinta Caithnes, Boost Juice’s general manager, in Mexico City. She is a great example of a young Australian promoting the national brand overseas and expanding the operations of her franchises.

Boost Juice is not only winning franchises in Latin America but is also expanding across Asia, Europe and the Middle East too. As Caithnes quips: “I’m constantly on the go, but the positive reaction we get to Boost Juice all around the world makes all this globetrotting worthwhile!”

Moving from Mexico to the other end of North America, Bakers Delight is doing well in Canada. Bakers Delight, trading as Cobs Breads, recently opened up a store in Vancouver, and now is looking to move into the lucrative US market.

According to founder Roger Gillespie, who is a fourth-generation baker, “my priority is to have 30 to 40 bakeries up and running in Canada”.

Another key market for Australian franchises is India. The economic reforms of Prime Minister Manmohan Singh has really opened up the Indian market to western tastes (while, in turn, expanding India’s strong culture to the rest of the world – just look at Bollywood!) and Indian’s current economic growth rates of 7-8% are a promising sign of opportunities for Australian businesses to come in the future.

Furthermore, a relatively young population (compared to the rest of Asia) is helping fuel a retail boom in food, fashion and entertainment. India’s growing middle class of 300 million people and their associated consumer purchasing power is driving demand for Australian franchise brands such as Gloria Jean’s and Cookie Man as a result of the bulging shopping malls.

In addition, Australian sports franchising is becoming big with Australian basketball legend Andrew Gaze moving the Australian brand in India beyond “the three Cs” of cricket, curry and Commonwealth.

Gaze has just announced a strategic partnership between his company Australian Basketball Resources (ABR) and the new Indian sports company Jus Sportz, which will see Australian basketball brands – mainly sportswear, footwear and memorabilia – sold throughout India.

Jus Sportz will launch four stores in southern India by March 2007 and plans to expand to a total of 20 stores across the sub-continent within five years. Gaze sees his role as a pioneer in terms of giving Australian sports brands a “beach-head” into the growing Indian sports retail market. “The new deal will create opportunities for more Australian companies to expand their operations into one the of the world’s fastest growing developing country economies with a relatively low risk and great exposure,” he says.

So what should Australian businesses look out for with franchising overseas? What are the tricks and traps?

According to Cheryl Scott, Austrade’s franchising guru: “It’s really important to get good business partners/master franchisees, as you have to protect your brand carefully. You can be pro-active about this through careful selection in the first instance, but also thorough ongoing training and development so everyone feels part of the team.

“Generally, people like Australians,” she says, “but it is important to keep nurturing the relationships with the franchisees, once the choice is made. But it’s a real growth area and a good choice for Australian companies wanting to expand on the global stage.”

So maybe those Wiggles are really on to something. So get with the strength, and whether you speak English, Spanish, Portuguese, Mandarin or Cantonese repeat after me… D-O-R-O-T-H-Y……..

*Tim Harcourt is chief economist of the Australian Trade Commission and author of Beyond Our Shores.

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