Bring the Brand to
You
New franchise ideas that just
might be worth considering
By Tamer Hafez
You scour malls searching for the latest and greatest of
them, you drive past glitzy billboards extolling their joys. If you
go out to eat, chances are you’re putting them in your mouth.
Foreign goods have always had clout, and as the market floods with
Sony gadgets, Mango and Zara shirts, franchises have been the fast
route to success for many of today’s entrepreneurs.
In 1973 Egypt had its first taste of post-revolution franchising
when Wimpy, a British chain of hamburger restaurants, opened a
location in Cairo. It was an early beau in Egypt’s turbulent love
affair with foreign brands. But protectionist barriers, the cult of
tawkilat (in the private sector) and of Nasser (in government),
non-tariff barriers and import duties as high as 2,000%, and a
generally lousy economic climate all stalled the entry of foreign
goods until rounds of customs reforms in 2004 and earlier this year
streamlined the import process and slashed duties.
Today, franchises are streaming into the market. The US
Commercial Service estimated that over 60 franchises have opened,
but that was before the explosion of brands at City Stars. Some
estimate the number is as high as 300 brands. The latest addition
to the fast food scene includes Burger King, while the Alshaya
group (master franchisee behind Starbucks in Egypt) is opening
several dozen other brands at Maadi CityCenter and elsewhere,
including H&M, Boots, Mothercare and Body Shop.
From clothes to home utilities to food chains, consumers aspire
to own, eat and wear global brand names. Franchising gives owners a
competitive advantage: the business can trade off of the
international brand’s reputation and customers can benefit from the
experience and quality of foreign expertise.
Consumers love the idea of “Made in Egypt” when it comes to
religion, culture, music and art, but not when it comes to a new
home sound system.
Yet the public’s adoration is not unconditional, and big names
such as Sainsbury’s and McDonalds have been caught in the backlash.
During the 2000 Intifada, many boycotted American brands (including
McDonalds, KFC, Pizza Hut) and the newly opened Sainsbury’s grocery
store for supposedly supporting Israel. While Sainsbury’s profits
dropped substantially and subsequently closed up shop (though,
officially the store was closed due to a change in corporate
strategy), McDonalds emphasized its Egyptian ownership and
management and was able to re-gain its credibility.
So, the franchising boom continues. And as more products become
available, franchisers can take new directions. The market is
saturated with chain restaurants and entrepreneurs are looking
ahead to the next big niche. Potential franchise owners can bring
in popular foreign brands in domestically dominated sectors, open
franchised branches of local establishments in other cities, or
someday, take the domestic brand international.
An elite group of Egyptian brands could successfully franchise
their products abroad. Al-Malky, which makes traditional milk-based
desserts (omm ali, roz bil laban), has branches throughout Cairo,
covering its most profitable markets. Al-Malky does a delicious
thing well, and would potentially turn a profit in Western markets.
In the coming years, an American businessman on a trip to Egypt may
stop at an Al-Malky store and fall in love with the delicious omm
ali. He may beg Al-Malky to let him franchise the desserts back in
New York, making everyone multimillionaires. But that day isn’t
here yet, and neither Egyptian businessman nor foreign dessert fans
have considered taking the brand global.
But that doesn’t mean that the wheels aren’t in motion. There
must be a few Egyptian Bill Gates skulking around the boardrooms,
predicting future needs and waiting for the flash of Windows
XP-like inspiration that would allow local trailblazers to take
over an entire industry. Egypt must also have a few Sir Richard
Bransons, ready to build their own diversified Virgin empires but
instead of Virgin’s recording studios, clothes, airlines, hospitals
and bridal shops, a local empire would cater to cultural tastes,
opening a chain of mobile phone accessory boutiques, fusion koshary
restaurants and a line of branded mid-range microbuses offering
seat-belts and a screening of the latest Ahmed Helmy comedy.
By combining Egypt-specific business models with proven
international brands, business owners can reach entirely untapped
markets. McDonalds, for example, has customized its menu to suit
Middle Eastern tastes with the McArabia sandwich. This synthesis,
catering to cultural interests but holding oneself to an
international standard, makes the market ripe for franchise
investments.
Then, there is always bringing in foreign brands that no one has
considered. Given the consumer’s taste for everything
international, a new business idea coupled with a flashy foreign
name could translate into big profits. Currently, the market is
open for creative franchising options that appeal to both local
taste and brand-name comfort.
So, take a few minutes, brainstorm the next big thing and build
your business plan. In a subsequent installment, In the Black will
cover the steps it takes to turn your business idea into a business
plan.
Idea 1: Luxury North Coast Travel
Service
The business model: Luxury buses and minibuses that serve routes
between Cairo, upscale districts like the Diplomats’ Village,
Marina and other North Coast areas. State-of-the-art coaches
equipped with personal amenities, plush seats and a steward serving
chilled drinks. There would be bus pick-up and drop-off services to
all of the resorts, as well as a resort-to-resort shuttle.
Customers could reserve seats and view schedules via internet or
mobile. The cost would be billed to their mobile bill, Vodafone
cash (or similar products from Mobinil and Etisalat when they roll
out), their payroll account or through subscription to the
service.
Keys to success: A-class consumers flock to the North Coast, so
cater to their tastes fuse convenience with luxury ensure
reliability of vehicles and schedules have easy access to the
service ease of payment
Critical failure factors: aversion to riding buses buses seen as
low-class transportation unable to offer frequent (daily, twice
daily) routes because of limited clientele expensive start-up
costs
Possible extensions: There are many reasonably affluent smaller
cities like Tanta, Damietta and Fayoum, where a percentage of the
population would likely pay a premium to travel to and from Cairo
in air-conditioned, clean, well-maintained buses.
Foreign brand: The Limoliner is a deluxe 28-passenger coach that
travels between New York and Boston. Providing its passengers with
internet access, power outlets, great amenities and an attendant,
it has become the preferred means of travel for many regular
commuters. It travels between the cities at least three times a
day, everyday, offering businessmen the opportunity to commute in
absolute comfort.
Idea 2: On-call Car Maintenance
Service
The business model: Any person who owns a new car calls the
company when it needs repairs. A representative provides doorstep
pick-up of the client’s car, replacing it with a company car, and a
small service fee is added to the bill. No subscription would be
required to use this service.
Keys to success: Keep fees low target customers wealthy enough
to fix cars at official maintenance centers but who don’t have
another car available to them company car should be reliable and
easy to handle service provided in one phone call.
Critical failure factors: Problems with red tape and insurance
streamlining the procedure
Possible extensions: This company could launch a car club with
services for its clients, such as buying/selling advice, new car
comparisons, on-call towing and road tests. Having subscription
fees is an option.
Foreign brand: AAA is one of the most famous auto-clubs in the
world and franchising would provide a relatively under-supplied
market (people who want on-demand car care) with a name that has
already earned wide-spread trust. Not only does AAA promise highly
efficient and reliable service, it possesses a high level of brand
awareness, even in Egypt.
Idea 3: Audio Books for Arabic
Books
The business model: Offer a selection of audio tapes and CDs of
books in Arabic online, in libraries and bookshops. The increasing
prominence of Arab authors coupled with long commutes enables many
to catch up on modern and classic literature. Religious audio
lectures are already hugely popular, but diversifying the market
would allow consumers more choices. The success of Diwan bookshop,
the Bibliotheca Alexandrina, the annual Cairo International Book
Fair and the Reading for All Festival (which is sponsored by the
First Lady) signals a dedicated consumer base.
Keys to success: Correct placement and marketing through
bookstores and fairs a strong awareness amongst book-lovers audio
for popular and best-selling books, capturing the
love-to-but-too-busy market
Critical failure factors: Obtaining reproduction rights from
publishing houses is required small market lack of materials may
limit offerings
Possible extensions: Offer book reviews and recommendations to
guide readers. Create audio translations for popular books written
in English. Export the Arabic audio books to Arab populations in
foreign countries.
Foreign brand: Audio Book Company has done amazingly well. Its
titles are comprehensive and it is one of the oldest businesses
working with audiotapes. Using its name as a franchise would
increase the trustworthiness of the product, and help with brand
recognition amongst foreigners familiar with the company.
Idea 4: The Do It Yourself (DIY)
Option
The business model: A chain of shops that supply high-quality
tools and project kits for home decoration and handy-work. The
Do-It-Yourself craze shows no signs of slowing down in the UK and
US; people are remodeling bathrooms, staining decks and decorating
their children’s bedrooms to the extent that such work has become
more of a hobby.
While DIY guides take up entire sections at Barnes and Noble, it
remains a foreign concept in Egypt. While a large mall in Haram
called Dary retails tools, it doesn’t appeal to middle- and
upper-class consumers, for whom it would have to become “cool” to
pick up a tool.
Keys to success: Offer high quality, versatile tools easy to
understand instructional manuals grab the market of young
perfectionists who want the room color to be just so convince
upper-class consumers it’s cool to get your hands dirty, perhaps
through a tie-in to popular programming such as those run by Oprah
Winfrey pal Nate Berkus.
Critical failure factors: The company is mobilizing a new
market, and to succeed, DIY must overcome huge social obstacles
stigma attached to doing work that is traditionally considered
below you taking income from the gardener electrician or painter
traditional culture undermines the industry
Possible extensions: Since owners are hoping to create a new
market, instead of looking at possible extensions, focus should be
given to strengthening and retaining the DIY market.
Foreign brands: B&Q is a British chain that sells DIY for
the home and garden. It offers a wide spectrum of DIY tools
allowing you to build or re-model any area of your property. The
brand’s advice center ensures that people get assistance when
needed. Using a foreign brand is important; the prestige attached
with international goods will help overcome the current social
barriers. Dary, the local brand, could also be franchised, but its
service extension may not be as strong, and it lacks the
desperately needed allure that foreign brands possess.
Idea 5: Kiddie
Korner
The business model: A center that has a dual purpose: to
encourage child development through various activities while at the
same time serving as an event facility for children. The center
would primarily offer sessions, where infants onwards would develop
their language, communication and social skills through music
classes, art, fitness, and mommy-and-me sessions, with each class
catering to a specific age group. The center would also be an ideal
venue for children’s events being that it is already equipped with
the necessary facilities.
Birthday parties, for example, are currently held in
restaurants, or when families are lucky, private clubs. The center
would easily be able to accommodate such parties with an indoor
gymnasium with tunnels and slides and a kitchen with trained staff
to help kids decorate their own cakes, among other activities.
Keys to success: Creating a family environment qualified
instructors and personnel a trusted reputation experience in party
planning
Critical failure factors: Unhygienic facilities poor supervision
leading to injury or lawsuits poor educational quality services are
unaffordable
Possible extensions: Use the center as a network for qualified
tutors. Many parents find having to pick up and drop off their
children’s tutors to be a hassle. Instead, the center could provide
such transportation bringing the tutor right to the customer’s
doorstep.
Foreign brands: Gymboree is an American company that works to
improve the development of children ages 0-5 through music,
classes, and exploration. Classes are broken up into seven stages
based on the developmental rate and age of the child, meaning that
the course activities grow with the children. At age three months a
child would be learning signs to help communicate, and at age
three, they would be engaging in art classes and independent play.
The brand already has 500 franchises in 26 countries. It offers
each franchise staff training, special equipment, assistance in
marketing and a network of support.
Idea 6: The T-Shirt Super
Market
The business model: A shop provides plain color, high quality
cotton t-shirts to shoppers who want to design their own prints.
Clients can tailor a t-shirt to their taste regardless of
design/picture source. The self-designed t-shirt can be marketed on
both ends of the economic spectrum, from a boutique in Maadi to a
tiny shop in Attaba. The shirts are cheap to make and appealing to
anyone with a little creativity.
Keys to success: Screen-printed shirts are already popular and
being able to make up your own catch phrase or graphic to put on
your shirt takes the idea of clothes as identity one step further,
providing the population with yet another way to wear their mind on
their sleeves.
Critical failure factors: Enforcing design or color limitations
low market visibility low brand awareness unclear market
Possible extensions: Offering other cotton-based clothes to
undergo screen-printing an on-line design and purchase option
Foreign brands: Most stores operating under such a business
model are online businesses. To capture the young customers who are
more open to buying online, pattern the business after Zazzle.com,
which boasts over 500,000 user-created products available for
purchase on the site. Or widen your customer base and go a step
further and set up a franchise deal that would capitalize on
Zazzle.com’s expertise; using their tools and experience to setup
an actual shop (since online shopping hasn’t gained much
popularity). But widening your customer base might not be that easy
— buyers in the United States are a different market (think
forty-something soccer mom who wants her kid’s face on her shirt)
than the most likely buyers in Egypt (teens and adults in their 20s
who want a glib phrase in English).
What’s next?
Sometimes, succeeding is simply finding the right market. Though
Wimpy closed in Egypt, the brand was wildly popular in South
Africa. Owned by Famous Brands, Wimpy has 452 restaurants in South
Africa and in 2007 it acquired a 75% stake in Wimpy UK, effectively
allowing the management of a developing world franchise to enter a
first-world market. Famous Brands plans to revamp the Wimpy UK
business model and brand to reflect the South African franchise’s
casual diner image, showing that sometimes a franchise can improve
on, overtake and absorb the original model.
Some franchises depend on the big name alone, entering popular
industries without ever modifying the product or researching market
gaps. Burger King, the latest burger franchise to hit town, is an
example of searching for a brand name before the niche. McDonald’s
and Hardee’s have already saturated the market, and homegrown fast
food chains such as Cook Door and Mo’men have captured a strong
following. Unlike the empty market Wimpy entered, Burger King has
its work cut out for it. The opening of its first branches in City
Stars and Sharm El-Sheikh show the company at least has its
positioning right — hit the foreign clientele where turnover is
quick and brand recognition is high. If Burger King proves there’s
room in Egypt for another char-grilled beef patty, imagine what
true innovators could do with a good idea, brand presence and an
open market.
Franchise Conference Coming in
October
From Oct 24-25, 2007 the US Commercial Service in Egypt and the
Egypt International Economic Forum are co-hosting the US Franchise
Development Conference. The conference aims to support the
expansion of the franchise industry within the country and
introduce American franchises to business opportunities in the
region.
It will explore franchising as a means of sustainable economic
growth, as well as serve as a networking event for businessmen,
franchisers and investors.
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