Strategies To Expand Local Franchise
Brand To International Platform
Presentation by :
Dato’ Syed Kamarulzaman
Dato’ Syed Zainol Khodki Shahabudin
Managing Director
PERBADANAN NASIONAL BERHAD
12 September 2014
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Content

Introduction

Definition & Purpose of International Franchising

Statistics of Foreign Franchises in Malaysia

Organizations Related to Franchise Services in Malaysia

Benefits of International Expansion

ASEAN Economic Community (AEC)

Indonesia’s Economic Growth Potential

Think Global, Act Local

Strategies For International Expansion
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International Franchising - definition

Going for business abroad other than your
origin country.

One of the most exciting ways to expand the
business via brands, business models,
products, standard operation, etc.

A strategic way to reduce dependence on
domestic demand and grow new, future
revenue and profit centres worldwide.
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Statistics of foreign franchises in Malaysia
There are about 30% foreign franchise brands in Malaysia recorded in August 2014.

523 (70% local franchisors)

55 (8% master franchisees to foreign brands)

165 (22% franchisees to foreign brands)
Franchise Industry’s GDP
Contribution
24.3
24.5
22%
24
8%
Billion (RM)
23.5
23
Registered Franchise in
Malaysia
70%
22.34
22.5
22
21.48
21.5
21
Local Franchisor
20.5
Master franchisees to foreign brands
20
2010
2011
Year
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2012
Franchisees to foreign brands
* Source : MDTCC
SOME OF THE COMMON INTERNATIONAL
FRANCHISE BRANDS
5
Malaysia’s International Achievement

In 2013, revenue of sales generated through franchise related international activities
amounting to RM 177.71 million with over 1,400 outlets nationwide.
Country

Number of franchise
brands
Indonesia
22
China
14
Singapore
17
Philippines
10
India
10
Vietnam
10
Brunei
10
Saudi Arabia
9
Australia
7
Amongst Malaysian brand name such as Nelson, Marrybrown, Secret Recipe, Clara,
EOG (England Optical Group), Hot & Roll, etc.
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* Source : MITI
Organization Related to Franchise
Services in Malaysia
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Benefits of Expanding Your Brand
Into International Market
Global
expansion
Increased
brand value
Local
knowledge
& networks
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Accelerated
growth
International
Expansion
THINK GLOBAL, ACT LOCAL!
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Think Global, Act Local
International Franchise Expansion (its complicated and challenging)

Not just simply translating the operations manual of a business into
another language and training a franchisee to operate a unit just like
normal domestic franchisee.

Local customization of products to cater for local needs
(ie 7-Eleven @ Indonesia : a culture of love for socialising, such as outdoor
gathering space, capitalize on social networking applications (FB, Twitter)

Taking into consideration of local culture, legal-political, economic
environments, financial regulations.
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ASEAN Region
- 10 countries
- Population exceeding 615 million (year 2012) *
- Huge market potential with Gross Domestic Product (GDP)
exceeding USD 2.43 trillion (year 2012) *
by year 2019, GDP forecasted to exceed USD 3.7 trillion *
" Thinking Globally, Prospering Regionally "
* Source : International Monetary Fund (2012) / Association of Southeast Asian Nations (www.asean.org)
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ASEAN Economic Overview


ASEAN averages 5% GDP growth from 2010-2013
ASEAN economy seventh (7th) largest economy in the world

ASEAN – EU – China – India (year 2012) :
ASEAN (10)
EU
China
India
Area size
4.4 mill sq km
4.4 mill sq km
9.6 mill sq km
3.3 mill sq km
Population
617 million
502 million
1.35 billion
1.2 billion
GDP growth
5.7 %
GDP per
capita
Total trade
USD 3,748
USD 32,710
USD 6,095
USD 1,592
USD 2.4 trillion
USD 11.8 trillion
USD 3.88 trillion
USD 795 billion
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(0.2%)
7.8 %
* Source : MITI
4.9 %
Indonesia’s Economic Growth Potential

Average GDP (2010 – 2013) is 6.15 % *

Largest number of workforce (more than 250 million).
exceed 270 million by 2025, 290 million by 2035.

Huge youth population (median age is 28.2 years).

Based on 2010 survey, 19% of population below 10 years of
age & 37% below 20 years of age

Large workforce access to employment opportunities.

Indonesia is well positioned : huge domestic market, large
group of young people.
* Source : www.indonesia-investments.com
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ASEAN Economic Community (economic integration by 2015)
Focusing on four (4) key characteristics :
1.
Single market and production base
2.
Competitive economic region
3.
Equitable economic development
4.
Integration into global economy
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Why AEC Makes Business Sense?
ASEAN + Korean
(670 million)
ASEAN + INDIA
(1.84 billion)
ASEAN + JAPAN
(745 million)
ASEAN (population)
(620 million)
ASEAN + CHINA
(1.9 billion)
ASEAN +
AUSTRALIA –NEW ZEALAND
(645 million)
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* Source : MITI
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5 Strategies For International Expansion
(No Strategy = STRAGEDY)
1.
Develop strong and sustainable international growth.
2.
Have solid resources and full commitment to support international
expansion (operations).
3.
Understanding the legal environment.
4.
Appoint strong and capable partners.
5.
Develop realistic and achievable development targets.
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1.Develop strong and sustainable international growth

Organizational readiness : excellent franchise model and support system,
ability to replicate these attributes in other countries.

Evaluation of resources : well trained and experienced staff.

Financial strength : funds ($$$) to support international expansion.

Extensive Research : investigate potential markets, cultural practices and
customs, legal environment, language.
Example:
McDonalds (Malaysia) introduces porridge menu for Malaysian market
McDonalds (Saudi Arabia) closes its business during prayer times
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2. Sufficient Resources and Commitment to Support
International Operations

Management commitment : equal attention and support irrespective
local or foreign franchisees.

Employees capabilities : staff capable to manage and support
international franchisees.

Comprehensive Information (knowledge centre / resources) :
extensive information and knowledge platform @ 24/7 @ around the
clock (global).

Support infrastructure : invest in support infrastructure for
international expansion.
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3.Understanding the Legal Environment

Clear understanding of laws, rules and regulations related to the
business.
E.g Registration of intellectual properties (IP), trademarks to
protect brand from “opportunists”.

Appointment of capable and experienced legal firm/advisor ;
familiar and well-versed on the local legal environment (business
registrations, competition / anti-trust rules).

Appointment of qualified and reputable accounting firm/advisor ;
familiar with taxation regulations.
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4.Appointment of Strong and Capable Partners

Identify capable business partners (wrong selection will cause brand image
affected).

Reliable local support team (familiar with local business environment).

Rely on strong local partner, fully trained and involved in the business with
detailed operating procedures.
* consistency in delivering quality, service, cleanliness, value
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5.Develop Realistic and Achievable Development
Goals

Ideal territory area size (progressive based growth targets)

Have mutual agreement for number of outlets targets (between
franchisor and master franchisee)

Have specific market segmentation (targeting? positioning?)

Have sufficient financial resources for growth and support

Have the right size of skilled employees / team to operate

Have the right pool of suppliers of products / materials
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Think GLOBAL, Act LOCAL!
Main thing is = it all comes down to having :
a solid plan,
sticking to it,
executing it well.
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