As an entrepreneur, you might have dreamt at some point of owning a foreign brand, such as McDonald's or Starbucks.
It used to be that foreign brands were just within reach of the big players. But now, some foreign brands prefer to go to smaller local players—as long as they have sufficient scale to grow the brand in the Philippines, smaller players are seen to put more time and attention to the brand compared to bigger players with an already diverse portfolio.
“They don't just want to be one of the many brands under a bigger company's portfolio—when that happens, the focus is not on their brand but on the company's more established and bigger brands,” shared Hans Clifford Yao, managing director of the Adrenaline Group, which brought in Petit Bateau, a children's apparel retailer from France, and The Paper Stone, a stationery brand from Singapore.
Now, any local entrepreneur has a fair chance of owning a foreign brand. Thus, here are five reasons why it is sometimes better to invest in a foreign brand than to start your own business concept from scratch:
1. Brand and marketing discipline
When you buy a foreign brand, it already comes with clear and established brand guidelines. You do not have to invest heavily in the development of a new concept, nor invest in branding and marketing strategies from scratch. Not only has the work has been done for you, but it is also a branding and marketing discipline that has yielded favorable results in different markets.
However, the foreign franchisor should also be flexible to the local market. Find a foreign franchisor that is not only willing to adapt to the local market, but is also willing to put their foot down when localization efforts might destroy the concept. It is all about finding the right balance.
2. International standards and products
When you buy a foreign brand, you do not have to redo or relearn a new market. Nor would you need to learn how to market and operate something from scratch. Buying a foreign brand allows you to learn foreign best practices, and also affords you world-class franchise support from your franchisor.
There is also minimal investment for product development needed, and you are assured that you will get continuous research and development support from the mother brand. For example, The Paper Stone has in-house designers from South Korea and Singapore, all of whom provide a deft Asian touch to modern designs.
“The Paper Stone creates its own designs. It comes up with new designs every month, and matches it to their bags, notebooks, and pens,” shared Yao, which it then shares to all its franchisees in different markets.
A foreign brand is already backed by numerous trusted suppliers and service providers, which can be hard to come by for startup entrepreneurs. Hence, buying a foreign brand affords you speed in setting up the business.
For example, for the opening of its flagship store in the Philippines, contemporary French furniture brand Gautier sent a team of three craftsmen and visual designers from France to help with its construction—this team was able to set up the store in only three days.
However, the franchise application is another thing. So, aside from leveraging your credentials, referrals can also help speed up the process. “For The Paper Stone, the process only took six months because of the referral,” recalled Yao, in part thanks to referrals from reputable franchise consultants.
When you have a startup business, it can be hard to secure a spot in prime locations. This does not bode well, especially since success in business highly depends on location, location, location.
Buying a foreign brand eases this predicament—the brand itself can be leveraged to secure a good spot in prime locations, such as major malls and developments. Also, these foreign brands have previous experience in negotiating for good locations in different countries.
5. Brand recognition
The biggest advantage of buying into a foreign brand is that you can ride on its brand equity and strength. Most foreign brands are easily recognized the world over, making it easy for them to achieve success no matter where they set up shop.
However, you might also miss out on other opportunities if you focus too much on the obvious brands, such as McDonald's and Starbucks. Look at the different options available in the market that are still in keeping with your strengths and interests.
Talk to your OFW (overseas Filipino worker) friends and their relatives, and use them as an antenna for up and coming foreign brands. Ask them what foreign brands are already out there, and which ones can work for the Filipino market.
“It's worth it to invest in a foreign brand, especially if you are really addressing a gap in the market and bringing in something new that the local market has been demanding for,” noted Yao.
The Franchise License Association Singapore together with Astreem & U-Franchise are organizing an exclusive international Franchise Business Matching Event with key international brands on Thursday, June 23 in Bonifacio Global City, register online (http://www.ufranchiseasia.com/#!international-franchise-matching/u5mn9) or contact U-Franchise Sales & Management, (+632) 634-0586 and email: franchising[a]ufranchiseasia.com.
Sam Christopher Lim is the senior vice president for marketing and strategy at franchise consultancy Francorp Philippines; president of U-Franchise Sales & Management; and chairperson and director for special projects for Asean integration at the Philippine Franchise Association.