18 March 2019

Brands hunt the right faces for fresh markets

Will German kebabs, Arabian coffee and a French wine store be a hit with UK consumers? Only if brands can find the right franchisees to help them bridge the culture gap.

Key takeaways

  • A growing number of brands are choosing franchising as a low-capital way to enter new markets.
  • They seek out individuals or ‘master franchisors’ with the right track record and local knowledge.
  • HSBC works to connect both parties, harnessing its extensive global network.

Olivier Mermuys has a picture of the ideal franchisee to take his French wine merchant brand to UK customers.

“They would be someone epicurean, who can provide advice about the product,” he says. “They need a good administrative structure and an ability to understand direction. They may already be in the food business.”

With ambitious plans – he foresees a network of 20 Cavavin outlets in London alone – Mermuys’ challenge is to find people with the right qualities to adapt the brand to UK tastes. With two current UK franchisees already in place, he knows it can work.

To support his expansion bid, he has joined HSBC’s Meet the Brands initiative, which brings overseas brands together with potential franchisees.

Presenting to 120 UK entrepreneurs at his first event, Mermuys learned of a key cultural difference. While French franchisees enjoy details about the wines and their sources, canny UK audiences want to go “straight to the bottom line” and understand the brand’s profitability.

Mermuys is optimistic about striking the right deal. “HSBC is giving us good visibility,” he says. “It’s always a question of connection.”

Unique capability

That’s the watchword of HSBC’s franchising team, which harnesses the power of the bank’s international network to bring overseas brands to the UK.

Many are big names in their home markets, but may have had little UK exposure. That’s where Meet the Brands comes in.

“Our international capability and footprint gives us a unique ability to make these connections,” says Martin Francis, international franchise director at HSBC.

UK brands reach out

The bank has recently begun to mount similar events abroad for UK brands seeking franchisors in new territories. The first of several planned missions to US cities took place in October, and the spring will see presentations to franchisees in France.

The franchise model is seen as especially attractive amid economic and political uncertainty, says Marc Talbot, HSBC’s head of international franchising development. “More businesses may look to franchise as a way of expansion without committing so much capital at present,” he says.

Many prove their concept with a pilot outlet in their target territory: “Once they’ve tweaked the menu to local taste, and got through the hurdles of local regulation, they have a model they can roll out more quickly.”

Testing the water

Dubai-based Coffee Planet chose this strategy for its UK market entry. It has set up an outlet in Cardiff to perfect its offering of speciality coffee at high street prices.

Through the venture, Coffee Planet found people in the UK have a greater desire for organic products, milk alternatives and decaffeinated coffee. It has tweaked its UK proposition accordingly.

“Although we are the largest roaster of speciality Arabica coffee in the Middle East, we believe tailoring our offer to the local market is key,” says Commercial Director, Mike Butler.

“Cardiff gave us the perfect testing environment. We were delighted to share this part of our journey with experienced franchisees at a recent Meet the Brands event.”

Master franchisee

The local knowledge of franchisees is equally critical for Hero Brands, which launches new brands across the world. Typically, Franchise Development Director Jon Cullen seeks out a master franchisee to cover a whole territory.

“We help a potential partner to understand the dynamics of the business,” he explains. “That enables them to develop a plan to populate a country or region with units. We work with them to find the right properties and raise brand awareness.”

Currently, the group is looking for partners to help introduce food brands German Doner Kebab and Salaid to a host of new countries, including the UK. An HSBC connection has already led to a 50-store deal in Egypt.

Cullen is delighted by the current buoyancy of the franchise model. “Food and beverage franchising just keeps growing. In some instances it’s regenerating high streets as retail is struggling,” he says. “People are always looking for new tastes.”

Many are big names in their home markets, but may have had little UK exposure. That’s where Meet the Brands comes in.

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