1. Strategies To Expand Local Franchise Brand To International Platform
Presentation by :
Dato’ Syed Kamarulzaman
Dato’ Syed Zainol Khodki Shahabudin
Managing Director
PERBADANAN NASIONAL BERHAD
12 September 2014

2. Content Introduction Definition & Purpose of International Franchising
Statistics of Foreign Franchises in Malaysia
Organizations Related to Franchise Services in Malaysia
Benefits of International Expansion
ASEAN Economic Community (AEC)
Indonesia’s Economic Growth Potential
Think Global, Act Local
Strategies For International Expansion

3. International Franchising - definition
Going for business abroad other than your origin country.
One of the most exciting ways to expand the business via brands, business models, products, standard operation, etc.
A strategic way to reduce dependence on domestic demand and grow new, future revenue and profit centres worldwide.

4. Statistics of foreign franchises in Malaysia
There are about 30% foreign franchise brands in Malaysia recorded in August 2014.
523 (70% local franchisors)
55 (8% master franchisees to foreign brands)
165 (22% franchisees to foreign brands)
* Source : MDTCC

5. SOME OF THE COMMON INTERNATIONAL FRANCHISE BRANDS
4/19/2017
SOME OF THE COMMON INTERNATIONAL FRANCHISE BRANDS
Ms Read – Home grown franchisor selling women’s clothing
Marry Brown – Home grown franchisor from Johor – First Malaysian Fast Food Franchise (Msian Book of Records)
Outlet overseas - Indonesia, China, Sri Lanka, Tanzania, UAE, Bahrain, Kuwait, Qatar and Saudi Arabia. Soon in Syria, Iran and Azerbaijan
Focus Point – Homegrown franchisor – Franchisor of the Year 2009
Malaysian Franchise Award Night 2009 Franchisor: Focus Point Management Sdn Bhd Nominated and winner in the category: "Franchise Of The Year 2009" Franchisor: Focus Point Management Sdn Bhd Nominated and winner in the category: "Best Outlet Growth" Franchisor: Focus Point Management Sdn Bhd Nominated and winner in the category: "Most Promising Franchisor Award" Franchisee: Formosa Optometrist Sdn Bhd (Tesco Extra Cheras) Nominated and winner in the category: "Most Promising Franchisee Award" Franchisor: Dato' Liaw Choon Liang Nominated Category: "Franchise Entrepreneur of the Year Award" Franchisor: Focus Point Management Sdn Bhd Nominated Category: "International Homegrown Franchisor Award" Franchisor: Focus Point Management Sdn Bhd Nominated Category: "Best Sales Growth Award" Franchisee: Noralina Teo Abdullah (Al Ameen Optic Sdn Bhd) Nominated Category: "Women Franchise Entrepreneur Award" Franchisee: U&I Optik Sdn Bhd Nominated Category: "Franchisee of the Year"
A& W stands for Allen & Wright and the 1st store in Malaysia was opened at Jln TAR in A&W with KFC, Pizza Hut, Long John Silver, Taco Bell under Yum! Brands Inc (listed company in US). 5

6. Malaysia’s International Achievement
In 2013, revenue of sales generated through franchise related international activities amounting to RM million with over 1,400 outlets nationwide.
Amongst Malaysian brand name such as Nelson, Marrybrown, Secret Recipe, Clara, EOG (England Optical Group), Hot & Roll, etc.
Country
Number of franchise brands
Indonesia 22
China 14
Singapore 17
Philippines 10
India
Vietnam
Brunei
Saudi Arabia 9
Australia 7
* Source : MITI

7. Organization Related to Franchise Services in Malaysia

8. Benefits of Expanding Your Brand Into International Market
International Expansion
Global expansion
Accelerated growth
Local knowledge & networks
Increased brand value

9. THINK GLOBAL, ACT LOCAL!

10. Think Global, Act Local www.pns.com.my
International Franchise Expansion (its complicated and challenging)
Not just simply translating the operations manual of a business into another language and training a franchisee to operate a unit just like normal domestic franchisee.
Local customization of products to cater for local needs (ie Indonesia : a culture of love for socialising, such as outdoor gathering space, capitalize on social networking applications (FB, Twitter)
Taking into consideration of local culture, legal-political, economic environments, financial regulations.

11. ASEAN Region countries - Population exceeding 615 million (year 2012) * - Huge market potential with Gross Domestic Product (GDP) exceeding USD 2.43 trillion (year 2012) * by year 2019, GDP forecasted to exceed USD 3.7 trillion * " Thinking Globally, Prospering Regionally "
* Source : International Monetary Fund (2012) / Association of Southeast Asian Nations (

12. ASEAN Economic Overview
ASEAN averages 5% GDP growth from
ASEAN economy seventh (7th) largest economy in the world
ASEAN – EU – China – India (year 2012) :
ASEAN (10) EU
China
India
Area size
4.4 mill sq km
9.6 mill sq km
3.3 mill sq km
Population
617 million
502 million
1.35 billion
1.2 billion
GDP growth
5.7 %
(0.2%)
7.8 %
4.9 %
GDP per capita
USD 3,748
USD 32,710
USD 6,095
USD 1,592
Total trade
USD 2.4 trillion
USD 11.8 trillion
USD 3.88 trillion
USD 795 billion
* Source : MITI

13. Indonesia’s Economic Growth Potential
Average GDP (2010 – 2013) is 6.15 % *
Largest number of workforce (more than 250 million). exceed 270 million by 2025, 290 million by 2035.
Huge youth population (median age is 28.2 years).
Based on 2010 survey, 19% of population below 10 years of age & 37% below 20 years of age
Large workforce access to employment opportunities.
Indonesia is well positioned : huge domestic market, large group of young people.
* Source :

14. ASEAN Economic Community (economic integration by 2015)
Focusing on four (4) key characteristics :
Single market and production base
Competitive economic region
Equitable economic development
Integration into global economy

15. Why AEC Makes Business Sense?
ASEAN + Korean
(670 million)
ASEAN + JAPAN
(745 million)
ASEAN + INDIA
(1.84 billion)
ASEAN (population)
(620 million)
ASEAN +
AUSTRALIA –NEW ZEALAND
(645 million)
ASEAN + CHINA
(1.9 billion)
* Source : MITI

17. (No Strategy = STRAGEDY)
5 Strategies For International Expansion
(No Strategy = STRAGEDY)
Develop strong and sustainable international growth.
Have solid resources and full commitment to support international expansion (operations).
Understanding the legal environment.
Appoint strong and capable partners.
Develop realistic and achievable development targets.

18. 1.Develop strong and sustainable international growth
Organizational readiness : excellent franchise model and support system, ability to replicate these attributes in other countries.
Evaluation of resources : well trained and experienced staff.
Financial strength : funds ($$$) to support international expansion.
Extensive Research : investigate potential markets, cultural practices and customs, legal environment, language.
Example:
McDonalds (Malaysia) introduces porridge menu for Malaysian market
McDonalds (Saudi Arabia) closes its business during prayer times

19. 2. Sufficient Resources and Commitment to Support International Operations
Management commitment : equal attention and support irrespective local or foreign franchisees.
Employees capabilities : staff capable to manage and support international franchisees.
Comprehensive Information (knowledge centre / resources) : extensive information and knowledge around the clock (global).
Support infrastructure : invest in support infrastructure for international expansion.

20. 3.Understanding the Legal Environment
Clear understanding of laws, rules and regulations related to the business.
E.g Registration of intellectual properties (IP), trademarks to protect brand from “opportunists”.
Appointment of capable and experienced legal firm/advisor ; familiar and well-versed on the local legal environment (business registrations, competition / anti-trust rules).
Appointment of qualified and reputable accounting firm/advisor ; familiar with taxation regulations.

21. 4.Appointment of Strong and Capable Partners
Identify capable business partners (wrong selection will cause brand image affected).
Reliable local support team (familiar with local business environment).
Rely on strong local partner, fully trained and involved in the business with detailed operating procedures.
* consistency in delivering quality, service, cleanliness, value

22. 5.Develop Realistic and Achievable Development Goals
Ideal territory area size (progressive based growth targets)
Have mutual agreement for number of outlets targets (between franchisor and master franchisee)
Have specific market segmentation (targeting? positioning?)
Have sufficient financial resources for growth and support
Have the right size of skilled employees / team to operate
Have the right pool of suppliers of products / materials

23. Think GLOBAL, Act LOCAL! sticking to it, executing it well.
Main thing is = it all comes down to having :
a solid plan,
sticking to it,
executing it well.