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Dickey's, Slapfish, Smoke's share learnings from overseas expansion

Franchisors who have ventured into the Middle East shared experiences at the recent Restaurant Franchising & Innovation Summit in Louisville.

Pedro Ramos of Agilence chats with Andrew Gruel, Slapfish; Jim Perkins, Dickey’s Barbecue Pit; and Ryan Smolkin, Poutinere. Photo by Willie Lawless.

May 14, 2019 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

As consumer tastes have become more global thanks in large measure to the internet, franchise organizations have an opportunity to expand beyond the home front. The journey, while adventurous and potentially lucrative, can be fraught with peril.

Three western franchisors who have ventured into the Middle East shared experiences with attendees at the recent Restaurant Franchising & Innovation Summit in Louisville, discussing ideas about identifying business partners, negotiating with foreign franchisees and protecting the brand. Pedro Ramos, vice president of sales at Agilence, moderated the session.

Andrew Gruel, founder and CEO of Slapfish; Ryan Smolkin, founder and CEO of Smoke's Poutinere; and Jim Perkins, vice president of international development at Dickey's Barbecue Pit, agreed that now was a good time for American brands to take on the Middle East. Gruel said business people in the region have the resources needed to open a large number of locations and they are easy to work with, while Smolkin, the perennial optimist, surmised, "There are tons of good groups out there. These guys are business people, and they want to expand and grow."

Perkins said the average guest check in the Middle East quadrupled that of the U.S., despite the fact that the menu doesn't include alcohol. People in the Middle East, he said, want to eat Texas style barbecue.

Do your homework

But to take advantage of the opportunity, a franchisor must begin by doing their homework. Perkins said it is important to first research the market, focusing on factors such as the cost of doing business, the demographics, the available infrastructure, the gross domestic product, the level of corruption, and what other western brands were in the market.

Smolkin, who said he has received a fair number of oversea inquiries for his brand, said another important factor was population density.

While the reason for doing this research might seem obvious, Perkins said potential foreign partners will respect the fact that you've taken the time to learn their market.

And while learning about any new market is important, Gruel said the converse is also true: a prospective foreign partner must understand your brand and must want to be a part of it. "You need a partner who's flexible who wants to work with you," he said.

Smolkin said he places a premium on partners who are looking to open a large number of stores. Once a partner is identified, Smolkin said he tries to surround himself with people who know the market well.

Perkins is upfront with prospective partners about what is non-negotiable early on in the conversation.

"I try to keep it owner to owner, point to point," he said, adding that business relationships in the Middle East were an ongoing process.

Protect your brand

One of the most important considerations discussed was one that was not unique to any particular geographic market: the protection of intellectual property.

Smolkin said he works with a number of lawyers to make sure his intellectual property is protected in any agreements he signs. Getting "knocked off" in the U.S. and Canada has taught him that his brand can be compromised and he can't sue everyone who is using his company name.

"People are going to constantly try to rip you off," Gruel agreed.

Another consideration to keep in mind from oversea expansion was the chance to get new ideas to bring home. Perkins said he is planning to introduce an idea he found in the Middle East, which he was not ready to disclose. Smolkin said he also plans to bring foreign ideas to North America. Gruel added that that food trends do not always originate in the U.S.