Chain Leader

Franchise Developer: Working with a Foreign Franchise

January 1, 2007

When the first U.S. Pollo Campero opened in 2002, people waited up to seven hours for a taste of home.

Usually international franchising refers to American companies expanding abroad, but some foreign restaurant brands have started doing business in the United States. Working with a foreign franchise carries its own rewards and challenges, says Jose Cofiño, president and chief operating officer of Los Angeles-based ADIR Restaurants Corp., master franchisor in the western U.S. for the Guatemalan fried-chicken franchise Pollo Campero. Here are some of his suggestions:

• Be entrepreneurial. Be ready for a different type of partnership with a foreign franchisor than with a U.S. brand. “It can be very fun or very frustrating,” says Cofiño. “But assuming the franchisor is willing to be flexible, you’ll be able to help form the brand in a way that you can’t if you’re working with McDonald’s.”
• Consider your local immigrant communities. A foreign franchise may have strong brand awareness and loyalty among a local community, which can serve as a launching pad for the rest of the market. “We knew there was a market for Pollo Campero because people were importing the product on their own on airplanes in huge quantities,” says Cofiño. Then choose your first store location carefully, putting it where people who already know the brand will come.
• Account for differences in labor costs. In many countries labor is less expensive, so a foreign business model may include labor-intensive systems. “It’s key to ask how the technology, equipment or restaurant layout could be changed to account for the labor costs over here,” says Cofiño.
• Prepare for different cultural norms. Other countries may have different communication styles and decision-making processes. “Here we tend to make decisions very quickly, which the franchisor may see as reckless,” says Cofiño. “And other cultures take much more time to let ideas percolate, which can drive a U.S. franchisee nuts.” Communicate more to head off misunderstandings.
• Ask questions up front: How much market research have you done on the acceptance of your concept here? Do you have a U.S. office? Do you have U.S.-based tools, systems, processes and manuals (not just a translation of a foreign manual)? What PR are you doing to drive the credibility of the brand in a business-to-business setting, to make it easier for franchisees to find financing? How have you altered the way you do business for the U.S. market? “If they haven’t operated here before, there are going to be challenges for the development of the brand,” says Cofiño. “It’s very important go in with your eyes wide open.”

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