FT Writer Returns with Tips about Turkey Expansion
Our full article about doing business in Turkey will appear in the June/July print edition. Meanwhile, here’s advice for franchise systems who want to expand there:
Do your homework first, said Commercial Specialist Gorkem Yavilioglu. Good sources on Turkish history and culture are "Istanbul, Memories and the City" by Orhan Pamuk, and "Crescent & Star: Turkey Between Two Worlds" by Stephen Kinzer. Stay updated with the online English language Hurriyet Daily News. And visit the country before seeking a partner there. Although the Turkish Franchise Association is not very large or active, read through its website, at Ufrad.org, to check out its membership lists. "I had a phone call from a coffee franchisor who didn't even know we have Starbucks here," Yavilioglu said.
To be able to find good locations, build quickly and penetrate the country, your partner will have to be a company of substance, said Mike Shattuck of Focus Brands. But when you meet potential partners, Yavilioglu said, don't launch into business conversation immediately. "In our culture, business is more friendly. Talk about personal things first, families and hobbies, for example."
Follow up on all conversations. "One mistake we see American companies making," said Yavilioglu, "is not getting back to the people they meet here. When back in the States, give them a call. If you want to do business, be insistent."
Expect negotiations to be difficult. William Gabbard, senior director for Edwards Global Services, said, "By culture, Turks only want to pay for hard assets, not soft costs. They understand that a pizza machine costs so much, but they don't want to pay for franchise fees or royalties. And Turks rank among the world's best negotiators." He said some franchisors extend franchise fee payments and others reduce initial fees there. Area developer Selcuk Zengil, who has sold five Subway franchises and is negotiating for more, said, "I tell candidates Subway is still a cheap investment. You can spend money on a Turkish brand and it won't be around in five years; Subway is all over the world."
Hire a local attorney. According to the World Bank's "Turkey Partnership Country Program Snapshot," top management in Turkish companies spend 27 percent of their time dealing with red tape. You need to work with someone with connections. Focus Brands now employs "a full time person on the ground in Istanbul" to keep Atlanta executives informed and to make those connections, Shattuck said.
Training can be tricky because, Edwards said, Turks also don't like to follow rules. Subway trains its area developers at company headquarters, in Milford, Connecticut; local managers and employees are trained in Turkey. "We tell our sub franchisees and employees that something's not our rule, it's Subway's rule," said Selcuk Zengil. "If you want to make a profit, do it this way."