IT’S MORE THAN YOUR CORE… GLOCALIZE-ING YOUR BRAND
Typically, newer franchisors seem to be a bit overwhelmed when facing their first few international franchise transactions. While the prospect of getting an oftentimes large, up-front franchise fee or master franchise adds an undeniable level of excitement to the deal, franchisors must also deal with (a) the general apprehension associated with letting another be the steward of their brand in a country that is more than a 10-hour flight away, and (b) complying with any pre-sale franchise disclosure or registration requirements in that country (as well as protecting their trademarks therein). In light of the foregoing, ensuring that its franchise system and its standards can and will be enforced in the foreign jurisdiction is often times a secondary consideration for a franchisor, with many assuming that the franchise agreement and other documents will protect their system contractually.
While the franchise agreement, operations manual and other documents will dictate what the franchisee is required to do as a matter of contract, the most successful international franchising stories more often than not involve a franchisor that is willing to adapt and, in some cases, outright change certain aspects of its franchise system to meet the practicalities and/or culture of the country where it is expanding. This is “glocalization” in action, a term which we understand first appeared in Harvard Business Review in the late 1980s and has its roots in the Japanese term dochakuka (which refers to a farmer’s propensities to adapt farming techniques to local conditions).
The fact that glocalization – which is commonly described as the practice of combining globalization and localization strategies by emphasizing the fact that the globalization of a product (or brand) will succeed when the product or service at issue is adapted to the region – is not always on a franchisor’s radar should not come as a surprise. Franchisors expend money, time and resources to support and promote standardization across their franchise and operations systems, while glocalization strongly encourages adaptation. The real trick for the franchisor is to achieve predictability through the written franchise documents, while also balancing the need for adaptation in certain “core” aspects of the franchise system – which may even include modifying some core menu items or advertising practices.
A great example of glocalization is how McDonald’s handled its entry into India in 1996. Prior to entering India (its 95th market at that time), McDonald’s – a beef-driven franchise – engaged in 5 years of market research and vendor development. In addition to opening the first McDonald’s location ever with an entirely non-beef, non-pork menu, including local favorites such as the Maharaj Mac and McAloo Tikki that conformed to local tastes, the franchisor ensured that the menu was segregated (vegetarian from non-vegetarian) from processing to serving. At the same time, McDonalds began rolling out new advertising campaigns designed to capture the culture, religion and appetite of the people of India. This includes an incredibly witty “wrapped” advertising campaign that is still used in India and other jurisdictions such as Indonesia during Ramadan.
In closing, the point here is that no matter how big of a franchise system you have or how much you think your menu items and other “core” components of your franchise system are “written in stone”, there is always room to analyze and evaluation glocalization efforts with both your counsel and business advisors in a manner that takes into consideration the everyday life and culture where your prospect or expansion plans are located. You will be happy you did.Back