A young population of 23 million in a democracy with a growing appetite for U.S. fast food has Atlanta-based franchisers looking to take cinnamon rolls, sandwiches and chicken wings to Taiwan.
Focus Brands Inc. and Wing Zone took part in a trade mission led by the Georgia Department of Economic Development in April, seizing the opportunity for a smooth introduction to a market they were already considering.
It’s not as though either has had trouble expanding abroad. Focus Brands has opened Auntie Anne’s pretzel shops all over Asia, two Moe’s Southwest Grills in Russia, and even a Cinnabon store in war-torn Libya.
Still, the Georgia department set up meetings that made it easy for the company to connect with the right people in Taiwan.
“For us, it’s a really convenient and cost effective away to get face to face with potential investors,” said Scott Chorna, director of international new business development Focus Brands, who returned from the trip to his base in Los Angeles.
Even more so than in other industries, the right local partner is paramount in franchising, Mr. Chorna said.
“Franchising takes a long time. They’re not just buying products to sell. They’re buying a business model to operate for a long, long time,” he said, noting that ideal partners have both passion for the brand and knowhow to operate the concept sustainably in the local market.
Exposed to U.S. restaurants since the 1980s, Taiwan has large cafe segment and sophisticated tastes, making it ripe for any of Focus’ five brands. And while 23 million people is nothing to sneeze at, Taiwan could serve as a springboard for expansion into mainland China, which has 1.3 billion mouths to feed.
“Many times a brand will use their partners in Taiwan to help them develop the China market” because they understand the language and culture, Mr. Chorna said, although Focus is still considering other avenues into China. Its only store there now is a stalwart Schlotzsky’s Deli in Beijing, which was there before Focus bought the brand.
Wing Zone, a chicken takeout and delivery franchise that started with two University of Florida students taking wings to hungry college buddies, also sees Taiwan as a gateway to Asia.
The company plans to open a store there by mid-2014, encouraged by Taiwan’s youth and its taste for chicken. Wing Zone started as a delivery service, which works well in densely populated areas, but it has also “slightly evolved into a meeting place for young people, which offers a unique change to our domestic model,” said Hair Parra, vice president for international development at Wing Zone.
The company has had to make a variety of cultural tweaks in places like Panama and Saudi Arabia. Before opening in Taiwan, new stores are planned in Colombia, Costa Rica and Russia.
Before opening, representatives take three trips to each prospective market and test flavors on 20-30 people each time to ensure that they satisfy local tastes. Taiwan will be no different, Mr. Parra told Global Atlanta by email from Japan.
“We opened in Malaysia and we had to make a few changes. For example, we sell the whole chicken leg there, and as we are getting ready to open in Russia, we will offer soup. There are a lot of subtle differences in every market we enter. In Taiwan there is no question that we will put some great new items or flavors on our menu,” Mr. Parra said.
Satisfying customers is only the first step; franchisers also invest in their partners’ futures, he added.
“We won’t go into a market that we don’t believe in. I really have to believe that I can take a franchisee and make them successful, otherwise the relationship won’t last and the concept won’t last. If you only focus on the money aspect you are doomed to fail,” he said.
Bachir Mihoubi, president and CEO of FranCounsel Group LLC, which advises American franchising firms looking overseas, said looking abroad can be lucrative if brands successfully navigate the challenges.
He said many fail to register their trademarks in the target countries in advance, which can present problems later when they go to open stores.
The trademarks themselves can also become a hurdle if they’re not culturally sensitive, he said. Church’s Chicken is a well-known example of combating this before it becomes a problem: it’s known as Texas Chicken in the Middle East and other countries.
While staying aware, American brands should also be ambitious, Mr. Mihoubi said. History has shown that they do well in developing countries, even some that don’t get along with the United States.
“It is absolutely amazing that a consumer actually chooses an American brand over a local brand when it comes to having a meal or drinking coffee, but when you ask that same consumer what they think about the U.S. foreign policy they have a completely different attitude,” said Mr. Mihoubi, who introduced Cinnabon to Egypt and Caribou Coffee across the Middle East while working with AFC Enterprises.
For more information on Wing Zone’s international locations, visit http://www.wingzone.com/international.html
For more on Focus Brands globally, visit http://focusbrands.com/international/
Mr. Mihoubi can be reached by email at [email protected].