Franchise and conquer

 Karen Osman investigates why franchising is the chosen expansion route for home grown and international brands alike.

The crusade for consistency is a battle that every franchise owner must fight on a daily basis, with training, centralised operations, audits and aligned communication being the weapons of choice.

It’s these systems and processes that can make or break a venture. Understanding your business and documenting every single process is a time consuming but necessary endeavour.

More Café, one of Dubai’s home grown franchise brands, has eight outlets in Dubai, three of which are owned and managed and the remainder franchised to Al Tayer, which holds the rights for the GCC market.

Marike Lap, managing director of More, emphasises the importance of this process, explaining how it supported the More expansion: “We set up two stores and then we set up our manuals and we used them to open our third store to test and then to adjust them.

You need to structure your business from A to Z before you franchise...everything from the drawings to the architectural specifications, so there’s no doubt between you and the franchisee as to exactly how you want to operate your brand”.

Just Falafel, another home grown brand, has big plans when it comes to expansion, aiming for 75 stores in the UAE in the next five years as well as targeting the GCC market in 2012 and Europe in 2013.

Consistency is the key aim and to support this, Mohamad Bitar, founder and managing director of the Just Falafel brand, was keen to put a solid infrastructure in place.

“We’ve invested in an 8000ft central production kitchen and a training facility so that we can train our franchisees and support them. You need the facilities — you can’t just open a franchise and not give franchisees the proper support.”

Joseph Tabet, regional director of the global sandwich brand, Subway agrees and explains their award-winning approach to franchise support: “The Subway franchise has been named the number one franchisee opportunity by Entrepreneur magazine for the 11th year, and this is because of the model and services we provide our franchisees.

Any franchisee is entitled to training, continuous online training, on-going business support in running the store properly and profitably, assessment of location and evaluation, [access to the] operation manual that compiles more than 48 years of experience, proven control systems that help manage the business better, sharing of best practices worldwide, marketing support to help improve sales, and monthly visits by our business consultant to help improve profitability of the store.”

At approximately US $100,000 to $250,000 for the business (depending on size of location) such a support system would be worth every cent to a potential franchisee and vital when it comes to achieving the master franchise target of 500 stores across the region by 2015.

Multiple markets
While running restaurants on your own doorstep, and running them consistently well, is no easy task, the challenge becomes even more complex when you’re responsible for delivering the same dining experience in multiple markets.

Multi-brand portfolio holder, Jumeirah Restaurants, already has its flagship brand The Noodle House located in several countries across the Middle East and beyond.

Achieving and maintaining a high level of consistency across all 16 existing outlets is an on-going project and, with potentially 30 more outlets to be signed in 2011, a water-tight approach is required.

Phil Broad, managing director of the company explains: “We’ve put in a global mystery diner programme, so we evaluate our partners every month and we share that result as soon as it comes out, which measures our key performance indicators of a customer experience.

“We get feedback directly from people travelling but we also go and do audits and I think that’s the key thing that you have to do continually — go into your partners’ stores with a supportive mind-set, give them feedback on how they’re operating and work with them to put a plan together to improve the business.”

While consistency is paramount, the flip-side of the coin is finding a balance between retaining the brand’s essence and adapting it to suit local markets. The multi-cultural mix of the Middle East can be challenging when it comes to implementing brand standards.

Radwan Masri, master franchisee for Tiffinbites in the region, explains: “We have noticed that customers in the UK are more comfortable with communal seating than here in the region; this is due to cultural differences.”

While restaurant layouts may be relatively easy to adapt to the local market, flavour preferences can prove more complex. Phil Broad explains how Jumeirah Restaurants works with its partners globally to overcome this obstacle for The Noodle House.

“We have a recipe bank of 500 recipes that we can use to work with partners to create the right menu for the environment that they’re working within and also adapt some of the flavour profiles whether it’s spice levels, number of vegetarian dishes, or the type of desserts that are on the menu.

So we do adapt the product offering but we still stay true to the brand by keeping core products on the menu and no product will go onto a partner’s menu unless it has been tested in Dubai.”

Jumeirah Restaurants also owns the rights across the region to operate a number of Caprice Holdings brands including Rivington Grill and The Ivy, the former already open in Dubai and the latter to open in Dubai in the spring.

Adapting to market conditions is an area where time and resources have significantly been invested, not only from an operational aspect but also from a menu perspective.

David O’Brien, operations director at Caprice Holdings says: “We pride ourselves as a company on the freshness and seasonality of our food and you need to get in the country and understand the market.

We’ve had to stop thinking European seasons and start thinking about our location and what’s best here. We do tastings every week and have our ‘specials board’ to ensure that happens.

“We localise well while maintaining the DNA of the brand,” adds O’Brien.
Franchising is one way of bringing globally acclaimed brands to the Middle East. The Ivy is one example, while the Jawad Business Group, which is responsible for a plethora of restaurants and cafes, has recently added Jamie’s Italian to its franchise portfolio.

“Just as Jamie Oliver is an incredibly cool person and an equally great chef, Jamie’s Italian is a worthy reflection of his persona and his honest ethos.

If we stick to serving the food by his ethos, and of course respective recipes, I have no doubt guests will love each and every item on the menu and return to enjoy them again and again,” explains Tapan Vaidya, general manager, restaurant division, Jawad Business Group.

He continues: “Local culture and traditions have meant that the menu has been suitably modified to include certain beef and lamb items in place of other red meat. Fresh local fish is a hit with all markets in the region and it has been well incorporated in the menu.”

The opening of the outlet in Dubai will be the first international Jamie’s Italian, and Jawad Business Group plans to franchise across the region. “We believe the GCC has the potential to accommodate at least eight Jamie’s Italian restaurants over the next three to four years,” reports Vaidya.  

Growing demand
“We have seven to 10 requests every day through online channels and through the PR campaign that we’re running,” explains Mohamed Bitar of the interest shown in the Just Falafel brand.

Positioning the franchise opportunity as an affordable business venture could well explain the number of enquiries, and at approximately US$120,000 to $140,000 to take on your own store, it’s not a venture that is capital intensive.

However, Bitar is not resting on his laurels, and will also be exhibiting at the Franchising Middle East Exhibition 2011, in order to attract more potential partners to Just Falafel.

Similarly, Jumeirah Restaurants will be exhibiting at both The Franchise Show in London and The Franchise Expo in Paris as part of its major business development strategy for entering key European markets, especially the UK.

“We have a lot of interest already in people taking the franchise from us. I think it’s really important for such a key strategic market that we build a relationship with the right operator who has food and beverage experience and who has an ability to do a roll out programme across the UK market, because it is a 150-store potential market on its own and the British consumer is already fascinated by Asian cuisine — I think that The Noodle House will fit very well,” reports Broad.

Growth is also predicted for the brands that have entered the region from overseas via franchising. Tiffinbites has two outlets successfully operating in Dubai and an expansion plan to open 11 outlets by 2014.

“We made sure to implement the franchise model to the fullest. The reason we chose to buy a master franchise in the first place is because the systems, manuals and procedures are already set in place. They have proven successful and therefore we followed those winning formulas,” explains CEO Radwan Masri of the success so far.

Ultimate goal
While having the right business development strategy in place will help to develop brand awareness and attract potential partners, getting the right partner is the ultimate goal.

Like any business within hospitality, relationships take centre stage and play a major role in successful franchising. Finding the right partner can be a challenging and drawn out process, but is ultimately rewarding.
Investment capability and F&B experience are important when deciding business partner criteria but aspects such as sharing the same values and aspirations and ensuring the same sense of commitment are also paramount.

“Don’t go for the first person that comes and says ‘I want your
franchise’. It should be a partnership. It should be a company that you can relate to and knows where you want to go rather than someone who just wants to invest. It has to be a partner who understands your brand and moves it forward,” advises More’s Marike Lap.

There is no doubt that the food and beverage franchise market is incredibly active. The influx of new brands to the region is continuous with a substantial amount of room for growth not just in the more sizable markets such as Saudi Arabia but across the GCC.

Tapan Vaidya of Jawad Business Group says: “In terms of volume, one must accept that UAE, Saudi Arabia, Kuwait and to an extent Qatar have market-sizes which are far more appealing than say, Bahrain and Oman. However, going by just the size of the market is not enough — it is what the operator does with the potential of a market that counts.

“For example, we at Jawad Business Group operate Chili’s in Bahrain with 10 restaurants and each restaurant is a profitable one. Quite a feat when there is only one other country in the GCC with more outlets.

Having said that, the cosmopolitan culture and the tourist attraction value of Dubai, along with the similar strength of Abu Dhabi, does make the UAE a lucrative market in spite of the downturn of the last couple of years. I believe the potential of this market will only grow going forward.”

Ruchdi Abou Haka, vice president F&B at Azadea, one of the largest franchising companies in the region with a portfolio including favourites such as Paul’s and The Butcher Shop and Grill,  also cites Abu Dhabi, commenting: “The GCC countries are all attractive in general.

However, the markets which come to mind are Qatar and Abu Dhabi. The growth of those two areas is especially supported by the local governments with growth in many areas, from tourist trading to expanding businesses.”

With the Middle East being a hive of potential, the prospect of going global will appeal to the spirit of any passionate entrepreneur and, in a part of the world that is not yet ‘saturated’ and is still open to new ideas and concepts, it’s an exciting time to be in the F&B franchise industry.

While the region has proven that it can successfully import some of the biggest brands to cater to the market, it’s encouraging to witness the development of locally developed brands gaining momentum in the international arena.

Top tips for franchising
1. Make sure you engage with the right business partner for you. Look for someone who is not only financially secure but has the right knowledge, support, and experience for your venture.

2. Research, research, research. Make sure you understand your target market and that the product and business model will be accepted by the population and suits their habits and way of living.

Obtain concrete statistics to support your decisions. Trade publications as well as franchise events will provide opportunities to get information.

3. Make sure that the new franchise has a competitive edge and can bring an added value to the market.

4. Always have a contingency plan and ensure that you over-estimate when it comes to the financial outlays so that there are no unpleasant surprises when you open.

5. Your employees will be the key to your success, as well as your brand ambassadors — so make sure you employ the best talent you can find to ensure a smooth operation, good communication, and ultimately, customer loyalty.

Find out more about franchising
There are several exhibitions coming up in the next few months that are dedicated to franchising.

Not only can the events provide you with a wealth of information, but they also provide opportunities to network and investigate different franchise concepts.

For the Middle Eastern region, The Franchising Middle East Exhibition 2011 runs from March 14 – 16 at Dubai World Trade Centre. Further afield, the International Franchise Expo in Washington, US will run from 1 – 3 April, 2011.

In Europe, the Franchise Expo Paris, which is recognised as one of the world’s largest and most varied franchise shows, will be held this year from 20 – 23 March at Porte de Versailles, Paris.

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