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Expanding Overseas

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Article, Franchisor Magazine, May 2012 - The world has never been smaller…no longer is it possible to sit in your own little corner of the world, perfect your business model, and then launch it according to your agenda on an unsuspecting ‘rest of the world.

Thanks to the Internet, every company is now global. It’s just that most don’t know it and therefore, with no global strategy in place, international interest can catch you off guard.

If you have a website, like it or not, your business has already gone global – the question now is how to manager it, contain it and protect it.

Even if you don’t have immediate intention of expanding overseas, it is important to give some thought as to whether it is something you would consider and, if so, what you can do now to protect your idea and build international applicability into your model.

Doing this upfront, is much easier and less expensive (both financially and in terms of lost opportunity) than doing it retrospectively.

Your IP PortfolioOne of the things that has continually amazed me as we have expanded Nanotek internationally is how blatantly people will rip off your intellectual property (IP). We’ve had people steal our entire website (even including our Australian phone number…so they weren’t too bright), try to use and even trademark our brand name, and actually photoshop their ‘slightly modified’ brand onto photos of our franchisees! Even before you think of going overseas, you need to take steps to protect your IP and the unique and distinguishable elements of your business, especially if  you have a brand that is able to be trademarked.  Unfortunately the comment, ‘I thought of that first!’ doesn’t hold any weight when it comes to international trademark protection and there is no shortage of people who are more than happy to claim your brand identity as their own. Each country has its own trademark application and examination processes and with the exception of the Madrid Protocol (through which you can make a blanket application across the EU and beyond to establish a priority date – which his kind of like officially saying, ‘I thought of it first’) you have to go country by country. This can be an expensive process.

First things First - The first step is to identify the key elements of your business model – in most cases this will be your brand, a corporate identity (including domain names), written materials and your business model. Next, find a goof IP or trademark lawyer who can advise you on what is protectable and how best to go about it (e.g. trademark, copyright, patent, registered design etc). International protection is potentially expensive (depending your global ambitions), but recent changed to the Federal Government’s Export Marketing Development Grant (EMDG) now enable you to claim a percentage of international trademark expenses under the scheme. So whilst it could be considered a speculative investment when your franchise is in the ‘start up’ phase, longer term it can really pay off. You can contact Austrade for more information on the EMDG program.

Thinking Global - Whilst we were building  the Nanotek system, we were always focused on systems. Rather than finding ‘band aid’ solutions for each issue as it arose, we took the time to develop systems that could address or solve the problem time and time again on an ever increasing scale. It is tempting as a startup franchise to find quick fixes but long term you  want systems that solve potential issues permanently. We found that if you take the problem and multiply it by 100 franchises (as opposed to maybe the 5-10 you have at the time) you will think very differently about finding the solution…and systems will evolve. This approach will prepare you perfectly in terms of international expansion. Sydney are duplicable, which means you can save your overseas operations from many of the problems you initially experienced. The result is a much more robust franchise system that will simplify the process of going global. This thinking also needs to extend to your online presence. Developing a website strategy upfront can not only increase your international visibility, it can save you a lot of time and money. Having a website platform that you can duplicate for new countries as they come on board, in combination with appropriate domain names, is a virtual prerequisite for international expansion.

Where to now? - The world’s a big place, so where do you start? There are basically two philosophies on where to expand to. One is that you pick the market based on it’s ‘fit’ to your system – in this scenario you actively ‘enter’ the market looking for suitable partners.  Logic can select the market, but you can spend a massive amount of money trying to find the right people. Then there was the way we did it – based on approaches from prospective international partners, we would select the people that best matched our system and, provided their market was also a good match with our system, we’d figure the rest out. This meant that our first overseas marketing where not as orthodox as those of other franchise systems – instead of the US, we found ourselves in countries like Saudi Arabia, France and most recently Russia. But our relationships are always strong which is crucial if you are to establish, survive, adapt and succeed in an international market. Which ever strategy you go with, just make sure you partner with the right people. This may sound obvious, but when things get difficult it is relationships that will hold the company together and communication that will solve the problems.

Adapting Local - As much as we like to think our system will work ‘as is’ anywhere in the world, the reality is that even though the world is getting smaller that doesn’t mean that it is getting similar. Each market has its own nuances, many of which won’t reveal themselves through market research or even pilot programs. The unique differences will only come to the surface with time in the market. This underpins a fundamental principle of international success – long-term commitment. There is a misperception that ‘international expansion’ = ‘instant pot of gold’. Whilst it is possible to confuse some international master franchise fees with telephone numbers, success is not selling into a market, it is growing within the market. In each country we have entered, it has sometimes taken year to fully understand the market and adapt our system accordingly – even minor adaptations can potentially have a massive impact. The challenge is finding the balance between bring protective of the system and listening to direct market feedback – this is key to long-term international growth.

Remember where you came from … As you expand globally, it is important to never lose sight of where you came from. We always endeavor to put out international expansion in the context of the benefit it offers to our Australian business. By going global we have been able to offer our franchisees:

  • Economies of scale in product sourcing and system development
  • Experience leading to product and system R&D
  • A global brand which inspires confidence and leverages international alliances

Not to mention being a part of an exciting and vibrant international network of Nanotek business owners!

Australian franchise systems are amongst the (if not THE) best in the world. The challenges of the Australian market, with its huge distances and comparatively small sparse population, prepare us well for expansion into overseas markets. For this reason we always cherish Australia as our international HQ and our ‘laboratory’ for the further development of our business worldwide.

Going global cannot only bring great business rewards, it can bring some tremendous experiences. In building an international business we have found ourselves in places we may have otherwise never visited – from the Saudi Arabian desert to cold Russian winters to the French Riviera – …and all for car cleaning! But better still, when we arrive we are greeted by friends…so whatever it takes, it’s worth it.

Jim Cornish is the CEO of Nanotek, and a Directory on the Boards of both the Franchise Council of Australia and the Franchise Academy. Jim’s business career included senior positions with multinational companies such as Mars, Merial and Nestle Purina prior to co-founding Nanotek in 2004.

Through a combination of exclusive polymer nanotechnology and a unique service delivery model, Nanotek has grown into an international multi-award winning franchise system with operations in over 15 countries – establishing itself as the Number One mobile car cleaning franchise in the world. 

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