We went to the experts and those who have done it to learn what it takes to move a franchise concept from country to country. In this issue we speak with Joe Lindenmayer from TSS Photography and Craig Slavin from Franchise Architects to get their views on international franchising.
Georgia franchise goes down under TSS Photography (formerly The Sport Section) is a franchise based in Georgia. It has been operating since 1983 and now has 222 units. Most of the franchisees are in the U.S., but the company has moved into New Zealand, Australia, and Canada. When asked to describe what TSS Photography does, President Joe Lindenmayer says, "We are the 'picture day' people." Franchisees provide individual, team, and class photos through sports organizations, schools, civic clubs, YMCAs, Boys and Girls Clubs, and PTAs. In many cases the photos are used as a fundraiser for the organization.
TSS Photography's first foray into the international arena turned out to be a case of bad timing. Lindenmayer explains, "We opened a franchise in South Africa back in the late '80s and early '90s. If you remember what happened politically and socio-economically in South Africa at that time, you can understand that it was a very difficult environment for our initial international move. It was hard getting the money out and doing any sort of commerce, so after a couple of years we both agreed that it just wasn't going to work."
The company continued to receive interest in expanding overseas. "We believe in core competencies. That's one of the things that have made us so successful over the years. We do what we do well and once we felt we had that under control in the U.S., then we expanded our reach internationally," asserts Lindenmayer.
Although Lindenmayer liked the prospects of going into the UK first, the next opportunity was much farther away. "We were approached by a gentleman in Wellington, New Zealand, who found us on the Internet. We began discussions with him about bringing TSS into New Zealand and Australia in the early months of 2003. They've really got such a hold of franchising down there and we saw many brands going in that it made a lot of sense for us."
It isn't enough to speak the languageEven though TSS is in 4 English speaking countries, Lindenmayer points out that there are still differences to be aware of. "Every English speaking country has its own culture. And that's one of the big lessons that, frankly, we continue to learn. Australia and New Zealand are wonderful countries and the people are terrific, but it's not the States. They have a different perspective on products. We held focus groups in New Zealand and in Sydney and Melbourne. But while there was a lot of excitement, the focus group only represents the people in the focus group. When you get beyond that scope, you'll see some changes."
Lindenmayer says there are other challenges, such as technology. "It's the little things that you don't think of. Take date formatting, for example. We go by day and month whereas they might go by month, then day. And then there are the logistics of working with any country. Regardless of the number of time zones away, you are dealing with basically a whole day away. We had to work around those challenges by keeping some staff later and making some technology improvements that would help communication. We are also dealing with things like customs and border issues that increase freight and the cost of doing business. One of our goals is to have a lab in each country (currently photos are processing centrally in the U.S. and shipped to franchisees for distribution). We are working on that with NZ currently. The planned launch for a lab, which we are calling TSS Down Under, is March of 06. As you can imagine in a post-9/11 world, international exchange of orders and goods can be a bit of a challenge. But we've done pretty well to work through it together with our master franchisees," states Lindenmayer.
International franchising provides more benefits than just moneyLindenmayer thinks the best part of international franchising is the sharing of experiences.He says, "Even though we are a franchisor with 20+ years of experience, we have learned much. For example, there is potential to market different products and offer different services. And I think franchisees from different countries can add to the culture of the franchise company since they are essentially part of your headquarters operation. There is a neat exchange all around. If you really look at that as an opportunity to learn and have that individual or group of owners contribute to your franchise headquarters, there is synergistic value for you there."
"Overall, international franchising has been a great experience," says Lindenmayer. "My philosophy is, every mistake is an investment in progress. If there's a problem, we isolate it and get it fixed while marginalizing the damages. If you are dynamic enough to try different things, I would strongly recommend it for a franchise company that feels like they're ready. From my experience I would say, don't focus on the master franchise for your revenue. In franchising, it shouldn't be about the franchise fee and when you are going international, it shouldn't be about the master fee."
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