・Company-owned
・Franchise
・Joint Venture
These are the three main methods for expanding stores overseas.
There is also a hybrid model combining franchising and joint ventures, but I’ll omit that here.
What do potential overseas franchisees look for in a Japanese franchise headquarters?
1. Brand strength
2. Unique, inimitable know-how and a highly reproducible system
3. Special products supplied by headquarters, such as food ingredients
And so on.
The other day, I had a meeting with a company from Estonia, one of the Baltic States.
They are a conglomerate operating a diverse range of businesses across the Baltic States and Finland (the Nordic region).
In addition to their own original food and beverage brands, they operate as franchisees for major U.S. food and beverage franchise brands.
They also have food manufacturing operations, medical businesses, and more.
I was fortunate enough to have a meeting with the company’s founder.
After introducing our respective companies, the very first thing he said was,
“So, how many stores does each of your brands have in Japan?”
It seemed like they wouldn’t even consider a brand for franchising unless it had at least three digits in store count.
That makes sense…
Joining a franchise means paying an initial franchise fee and continuing to pay monthly royalties in accordance with the contract.
Would an unknown brand in Japan really be worth that?
It’s a natural question.
Among the brands we’ve handled for overseas expansion, even the one with the most domestic locations—Saint Marc Café—had only about 350 stores in Japan as of 2011.
As for the others, Bariuma Ramen in Hiroshima had 40 domestic locations at the time.
As for Take-san, when it came to ramen, he had just one store in Japan…
Uncle Tetsu Cheesecake has three business formats in Japan.
Although not in the food and beverage sector, our nail salon business in Thailand started with zero locations (beginning with a single company-owned store in Bangkok) and now has 55 locations in Thailand.
All of these are franchise operations, and we are actively seeking franchisees in each country.
Lately, press releases from major Japanese foodservice companies have been all about overseas expansion.
Saizeriya in Malaysia (its first business in a Muslim country, operating under Halal standards)
Shisan Udon’s overseas expansion, Shinpachi Shokudo’s overseas expansion.
Both are part of the Skylark Group.
Torikizoku’s overseas expansion, Monogatari Corporation’s overseas expansion…
Major companies are truly focused entirely on overseas expansion.
This is a world of difference from 2010, when we first began supporting overseas expansion.
As far as I know, many of these overseas partners are also major international corporations.
I suppose having brand power changes the scale and caliber of the overseas partner companies you attract.
However, it’s not necessarily true that major overseas conglomerates are the best partners for Japanese companies.
Over the past 15 years of expanding overseas, we’ve fully experienced the challenges involved…
But let me say one thing: in our view, they are not the best overseas partners.
Over the past 15 years, we have helped a wide variety of Japanese companies establish franchise systems and expand globally.
When we say “establish a franchise system,” it’s because even if a Japanese company hasn’t previously operated a franchise, we help them establish one to support their overseas expansion.
Franchising is the process of turning a company’s know-how into intellectual property.
Every company possesses tacit knowledge that hasn’t yet been made explicit.
There is often intellectual property that the company itself doesn’t even recognize as such.
Our job is to bring that tacit knowledge to the surface and transform it into explicit knowledge.
In that sense, whether a company is currently operating a franchise in Japan or not is irrelevant to us. We focus on turning business formats we believe can be franchised into intellectual property.
Furthermore, we do not support business formats or brands that seem likely to fizzle out as mere fads.
No matter how long the lines may be in Japan, if we determine it will end as a fad, we will not provide support.
At that moment, we might receive inquiries from around the world from companies wanting to join the franchise, but since we aim to build long-term relationships with partner companies that will expand our business overseas, we explain our philosophy and encourage them to join other business formats or brands instead.
How can we franchise companies in Japan that still have few stores and lack brand power, and expand them globally?
It’s an eternal challenge, but we can see one clear path forward.
We’re finding the “answer” among companies that are already expanding overseas.
This is because I believe this is our greatest strength.
We are also selective about the Japanese companies we partner with.
If a company doesn’t align with our stated purpose for overseas expansion, it could cause problems for our overseas partners.
We carefully select both the Japanese headquarters and the overseas franchisees.
I believe that’s when the best partnerships are forged.
Our focus is always on both the headquarters and the franchisees. That is why we take pride in distinguishing ourselves from development and sales agencies that simply act as substitutes for headquarters.
That is why we are not merely a sales agency, a franchise development agency, or a matching service.
Our business stance is, by no means, that of a consulting firm; rather,
“Business Design Firm” (registered trademark).
We are a company that collaborates with partner companies to design and refine business models, create new entities (such as brands or businesses), and then franchise and expand them globally.
To all Japanese SMEs,
we can help you uncover the latent tacit knowledge within your company and transform it into explicit knowledge (a packaged set of know-how).
・This isn’t limited to the food and beverage industry.
・It’s okay even if you aren’t currently operating a franchise.
Why not franchise your business and expand it globally?