Franchising Outside the USA

Last month, Bob and I took a couple of weeks off to go to Ecuador. While we were there I had the opportunity to observe franchising in another country once more. It is always interesting to me to see the similarities and differences and what they mean to those franchising in other countries. As I observed them, I could not help to reminisce about our experience in South Africa.

When we went to South Africa in 1992 I got a real understanding of the challenges one faces when franchising in other countries. It was obvious to us that just because a concept was successful in the United States, it was not necessarily going to be so in South Africa. At the time,  however, there was a strong initiative to bring US franchised concepts to South Africa to assist this country with its massive unemployment. What better way to help people who had no training. Franchising would bring the know-how and the experience, or so it was believed. What we soon found out was that the challenges one faces in a different country are totally different than those we face here in the US; and, most franchisors, unless they already have a strong international presence, are not equipped to handle them. Therefore, we focused our energies in developing indigenous franchise concepts.

One of the projects we worked on was Lapa Foods. Clover International was the largest dairy and poultry co-operative in South Africa. They wanted to penetrate the now accessible townships and thought they could do so best via franchising a ‘bodega’ concept using shipping containers. Here are some of the challenges that we faced:

• Opening – To get approval to open the store took over 8 months and many, many meetings with town council and other parties. The most difficult part of the permission process was making sure that we did not step on anyone’s toes and respected the township hierarchy and politics.
• Dust – the dust in the townships used to get inside the electronic cash registers and we had to constantly call a repair person who did not necessarily like going to the township. In  addition everything in the store including all the equipment had to be dusted at least three times a day, whether or not you were busy.
• The Franchisee – choosing the first franchisee was in many ways easy. We were working on a pilot so we partnered with a self- educated resident of the township. To avoid politics we decided to offer a series of entrepreneurial workshops and choose the best student. And, the franchisee we chose was excellent. The problem arose with the extreme success experienced from the first day of opening the location. The franchisee had never seen the amount of cash that he now had. And, the franchisor was not prepared for the level of demand and kept poor records of all the deliveries leading to disputes and mistrust between franchisee and franchisor from the very first week.
• Success – yes, this was a real challenge because it surpassed the most optimistic projections and keeping the store supplied was nearly impossible.
• Staff – the two staff members chosen to help in the store were in their mid-twenties and had never held a job. They were smart and willing, but their lack of experience resulted in an absence of what to us is common sense making training them a real challenge. One time, I took the role of ugly American and was frustrated with one of the staff members because she did not know how to dust the shelves. I will never forget when the franchisee called me aside and said: “Lizette, she has never been taught. She probably has never been this close to shelves of food. Her mother couldn’t teach her. She hardly went to school. She is doing the best she can.” What a lesson!!! I am still grateful to this man after all these many years for showing me my stupidity and my own lack of common sense!

The time we spent in South Africa was not only my best franchising experience; it taught me important lessons about life, people and cultures. Perhaps the most important lessons were to make NO assumptions and to embrace the differences, because it is in understanding them that success exists.

Back in Ecuador the first Papa John’s location had just opened and everyone was excited about it. I couldn’t help myself and had to go visit the location. Did you know that Cuenca, Ecuador has the perfect weather and that there is no air-conditioning ANYWHERE! My question when I saw the new large Papa John’s location in one of the malls was how are they managing with the heat that is generated from the ovens? Also, Cuenca sits at 8,500 ft. above sea level. I wonder how they had to modify their recipe to make sure they got product consistency. Interesting operational challenges. How about sharing yours?