The Franchise International Malaysia 2011 which took place in late July/ eaerly August was an opportunity to see how international franchise systems conduct their activities in promoting their business. However the participation of foreign franchisors could have been on a bigger scale of participation, so that we can have a better opportunity to learn more about their approach towards international franchising.
As s follow-through learning point on international franchising, a brief reference is made to an article written by Anne Marie Doherty and Barry Quinn titled “Support mechanisms in international retail franchise networks” which was published in the International Journal of Retail & Distribution Volume: 35 Issue: 10 2007. This article is a result of a study of UK based retail franchises with international operations with the purpose to examine the methods adopted by the international fashion franchisors to support their franchisees.
Supporting the franchisees is a fundamental aspect of international retail franchise process. It is crucial to the success of the franchise business. Two aspects of support are identified,
- Firstly the strategic franchise management support, and
- Secondly the operational franchise support.
This conceptual framework for the support for international retail franchise process is considered appropriate to be considered by those franchisors with intentions to go international.
The first aspect is the strategic franchise management support and it covers the following:
1. The franchise manual
2. The development plans
3. The monitoring of financial data
The second aspect of the support is the operational franchise support includes the following:
1. Support for initial store opening
2. Visits
3. Merchandise range reviews
4. Marketing and advertising, and
5. Training
The writers also identified that for the support to be effective; two factors will facilitate the implementation of the support mechanisms, that is,
- the size of the international franchise division and
- international franchising experience
In bringing the discussion into the local context, this writer is of the opinion that generally our franchisors are still a long way towards achieving the above.
In relation to the strategic management support, the franchise manual has to be designed with the intention that it will be used internationally and not only designed and written for the local franchisees. Indications are that the current qualities of manuals are only ‘fit for purpose’ i.e. they are written with an erroneous emphasis to satisfy the registration requirements and not as mechanism to provide support to franchisees. This writer has seen manuals of franchise systems being ‘cut and paste’ to be applied to another. Manual design and writing is not based on a standard template but must be based on business and work processes implemented by the franchise business.
Another important point that is missing even in local franchisors is the development plans for the franchisees. Such development plans are critical for the franchisees to be successful as they are totally dependent on the franchisors for guidance. Franchisors need to be able to support the franchisees in formulating their development plans.
Franchisors are also required to monitor the financial performance of the franchisees to ensure that the financial health of the franchisees is strong. Franchisors should not only monitor for the sole purpose of ensuring that the right amount of royalties are paid. Strong and successful franchisors are testimony of the success of the franchise model.
The operational franchise support is where the typical franchisor is quite capable of executing. This is derived from this writer’s observations of local franchisors that are quite proficient in resolving the operational issues e.g. providing support for store opening; carrying out visits; conducting merchandise reviews; providing support for marketing and advertising campaigns as well as providing training. However in going international, the question of communication challenges; socio-cultural differences of values and perceptions; geographical distances; market and regulatory environments place demands on the franchisor to be more appreciative of the need to provide even more intense support.
To enable the above to take place, the franchisor need to create an infrastructure that includes a team of dedicated personnel with experience in handling international operations to manage the international franchise network.
The above is by no means comprehensive, the franchisor is encouraged to explore beyond franchising into the best practices of business that have international operations especially in relation to how these companies manage their different marketing channels. After all, a franchise network is a type of marketing channel with the purpose of serving and satisfying the end markets.
Marzuki Ahmad is the Managing Director and Principal Consultant of Franchise Channel (M) Sdn Bhd. He also sits on the Franchise Advisory Board, which is responsible in advising the Ministry of Domestic Trade, Co-operatives and Consumerism and the Registrar of Franchise on franchising matters. For more information, visit www.franchise-channel.com. Marzuki can be reached at marzuki@franchise-channel.com
