New restaurant competitor from Belgium brewing
Franchise Times is used to reporting on franchises exporting their services and products overseas, so it’s a good sign for the health of the franchise model to see a number of companies crossing The Pond, and oceans and seas to introduce their concept to the U.S.
Belgian Beer Café is looking to recreate the look and feel of a 1920s Belgian pub.
One such import is the Belgian Beer Café, which is recreating the look and feel of a 1920s café in Belgium—a country with 100 breweries for just 11 million inhabitants and food as superior as French cuisine and as generous as German, according to their brochure. There are at least 500 different styles of Belgian beer, most of which require its own glass; some are chilled, some served at room temperature.
Most foreign companies entering the U.S. to franchise are appalled by the patchwork of laws and the legal structure of selling franchises in the 50 states, and some even expect to make one deal for the entire country, according to Michael Brennan, an international attorney with DLA Piper in Chicago.
But for Erwin Himpens, franchise director, and Filip Janssen, from the head office in Belgium, coming to America has been a fairly easy feat. The two were exhibiting at the Restaurant Finance & Development Conference in Las Vegas.
Locations are in high-end areas or in well-traveled areas, such as the Newark Airport. University campuses are another sought-after location. The franchise estimates that Canada can handle about 20 locations, but that growth in the U.S. is limitless. “You need to find one in every city, but not a lot,” Janssen said.
The restaurants are company-owned in Belgium, and franchised in more than a dozen countries. They are still registering in the states—something that’s different from their home country. “In Belgium there is a lot less regulations,” Janssen said.
Insights from a futurist
America invented the franchise, perfected it and it now needs to export it, according to Joel Kotkin, presidential fellow in Urban Futures at Chapman University and executive editor of NewGeography.com.
Franchisors are doing their best to accomplish this, as evidenced by the number of development agreements with international names under the DBA (doing business as).
Kotkin spoke at our Restaurant Finance & Development Conference in November about demographic trends around the world. One of his observations was that if you want a mall location, head to a developing country. “Hot climates encourage people to meet there,” he said, so malls, especially in places like India and Dubai, are as much a destination as they are a place to shop.
Another trend to watch, he said, is youth. For example, 50 percent of young women in Italy say they don’t want children, while 80 percent of U.S. women say they do, he said. So while there is a wealth of younger people in Asia—except for China, with its one-child rule, and Japan—the U.S. market is aging.
About 60 percent of the population in Iran is under 30, according to an article in Slate magazine in 2009, (but no, we’re not advocating taking your franchise there). “Use the census and demographic (statistics) to determine where to take your business,” Kotkin said.
One last piece of advice from Kotkin: If you run a restaurant chain or other business where people gather, install free Wi-Fi. “Kids text at the table,” he pointed out, even if they have three friends sitting with them.
Arabic is the fastest growing language on Twitter, according to Time magazine. Wireless access will no longer be a choice in the future—worldwide. For interesting insights and reading, check out his website at www.joelkotkin.com.
Doing business in Canada
If you want to bring your concept to the people of Canada, you don’t have to go far. About 90 percent of Canadians live within 100 miles of the U.S. northern border. And 70 percent of the population can be reached in three major trade areas. And they speak English—unless they speak French.
According to Chad Finkelstein, an attorney with Dale & Lessmann in Toronto, Quebec’s Charter of French Language established French as the official language of Quebec, which makes it necessary to do business in French.
Forbes magazine rated Canada the No. 1 in its “Best Countries for Business,” according to Larry Weinberg, a partner at Cassels Brock & Blackwell in Toronto, who hosted a Canadian session and reception at the recent Restaurant Finance & Development Conference. Panel members were: Bruce Dimytosh, president of Prism Hospitality; F. Paul daSilva, director of Franchise Markets for the RBC Royal Bank; Sam Einberg, principal with Northwest Atlantic (Canada); and Andrew Reback, partner at Cassels Brock & Blackwell.
Here are some of the interesting info we took away from the panel:
• 11 percent of Canadians are left-handed, compared to about 1 percent in the U.S. So if you’re opening a golf franchise —or buying office equipment—you may want to have more than one set of left-handed clubs.
• Be aware when writing recipes that the U.S. gallon and the British, or Imperial gallon aren’t the same. For instance, an Imperial gallon is about 20 percent larger than a U.S. one, according to Wikipedia.
• Canadians tend to be early-adopters of technology—a selling point for franchises that are technologically advanced in their POS and other systems.
• Real estate is more expensive and hard to find in Canada.
• Large portions at restaurants aren’t expected—or desired.
• The Canadian government will not tax a franchisor if it only carries on business in the country through franchisees. That means you can’t sign contracts or train in north of the border.
And while bringing a U.S. concept isn’t exactly a guaranteed win-win, “it’s a safe way to learn global franchising,” Weinberg said.
From Church’s to Texas
One of the most valuable assets a franchise company has is its name, except when it doesn’t translate well.
Remember the infamous Chevy Nova’s debut in Mexico? It wasn’t until after an expensive launch that executives discovered in Spanish the name of the car meant “no go.”
Church’s Chicken was in good company when it had to change its name before finding partners to open fast-food restaurants in the Middle East. The venerable Red Cross traded its iconic “red cross” for a green crescent moon, a more tolerable symbol for a culture that doesn’t embrace Christianity.
Atlanta-based Church’s returned to its San Antonio roots for its name for expansion in countries with a large Muslim population. When not in Rome, so to speak, Church’s is Texas Chicken. The logo looks the same, only the name’s been changed.
Another reason to alter your brand name is when it doesn’t tell the new audience what’s behind the sign. An example is when Dunkin’ Donuts went into Spain. The name was altered to Dunkin’ Coffee, because “Coffee” depicted a place where you could meet friends to relax over a good cup of coffee, while “Donuts” limits the imagination to simply getting breakfast or a snack, says Scott Chorna, who did international development for the chain at the time. Chorna is now with Focus Brands.
The obvious changes that occurs when a chain alters its name or logo, says Pedro Voyer, chief development officer in charge of international development for Church’s, is that the company loses economy of scale, because all paper products, displays and signage require two print runs. Not to mention business cards. Voyer’s card has multiple logos on it so that he only needs to carry one version.
Earlier in his career when he was at Starbucks, he says, the decision was made to remove the word “Starbucks” and “Coffee” from the logo. By eliminating “words” and going just with its stylized image, Starbucks eliminated the need to translate the name when going abroad. The giant coffee chain, of course, has the luxury of having a logo with a high recognition rate. Although, blogs at the time were ripe with people angry that the logo was changing.
Fast food is positioned higher internationally than domestically, Voyer says. “QSR in the U.S. is product, pricing, experience (for the guest),” he says. “It’s the same internationally, but the experience piece is the aspirational aspect the brand.” People expect American brands to be premium brands.
“While we use them as convenience, they’ll go as a family,” he points out.
So often the name isn’t the only thing changed; often the concept’s image is upgraded, such as McDonald’s cafes in places like Europe that looked more akin to sleek fast casual spots.
“It’s all about knowing your audience. Church’s isn’t in the chicken business, after all. We’re in the people serving chicken business,” Voyer says.
And now for something completely different
After following a discussion of choice of law provisions on the American Bar Association listserve last summer, Stephen Giles, a partner at Norton Rose Australia, weighed in with his own version of where to set up court in Australia.
“I have been researching choice of law in the context of Australian States knowing the predilections of many of the U.S. lawyers on this listserve,” he wrote. “I am pleased to now publish my findings:
Victoria: Best restaurants and arts, so if the case or transaction needs a long lunch to reach agreement or a dinner to celebrate a great victory, Victoria is your jurisdiction.
New South Wales: Harbor views are great, so best place for a matter likely to go on for a while, i.e., best place to look out the window during a long-winded address.
Queensland: Great for settlements. Franchisors and franchisees just want to go to the beach.
Western Australia: Relaxed jurisdiction, as everyone is enjoying the prosperity of the mining boom. (Slight problem with courts given you can earn more than a judge or law firm partner earns driving a Caterpillar tractor on a mine site.)
South Australia: If either party (or the judge?) needs some lubrication to get you to desired outcome, SA has the best wines.
ACT/ Canberra: No one’s choice for anything really. As we say, Canberra is 20 square miles inhabited by politicians and surrounded by reality.
Northern Territory: Negotiations on the riverbank guaranteed to produce a quick result, as local crocodiles show no professional respect to lawyers despite likely genetic links.
As you can see we have our choice of law priorities sorted Down Under, with no apparent distinctions between franchisor and franchisee interests.