São Paulo – The world is the limit for Brazilian franchises. Established in the country, many companies in the sector are targeting international expansion. To illustrate these enterprises’ hunger for new business, it suffices to say that in 2000, only 15 national brands operated abroad. As of 2010, there were 68, i.e. an increase of more than 300% over a ten-year period. The figures were culled from a survey conducted by the Master’s Course in International Management of the Higher School of Advertising and Marketing (ESPM), in partnership with the Brazilian Franchising Association (ABF). To the association, by the way, the perspectives remain good, and according to to estimates, up to eight more companies should become established in the foreign market before 2011 is over.
“We now have 700 franchise units in 49 countries,” says Ricardo Camargo, a managing director at the ABF. Argentina is the market with the highest number of units: 144, followed by Portugal (118), the United States (64), Mexico (48) and Chile (36).
According to Camargo, the main targets of the ABF and businessmen in the sector include China, Colombia, the United Arab Emirates, Spain, Mexico, Portugal and Turkey. In the Middle East, for instance, the schedule includes attending a fair in Dubai and a meeting at the World Franchise Council in Lebanon. “Dubai, in particular, centralizes retail in the region, acting as a big shop window of brands for the Arab world,” he claims. “Not to mention the presence of large numbers of foreigners,” he says.
The professor of the master’s course in International Management of the ESPM, Felipe Mendes Boroni, also believes in the potential of national chains abroad. “In North America, especially the United States, this is a market that grows a lot,” he claims.
To Boroni, the secret of success, in this case, is more a function of the quality of the products and services supplied than of the fact that they come from Brazil. “Internationalization should not be based on the origin, but rather on the supply of differentiated products, capable of competing on a part with any foreign one,” he says. “It is best to leave the Brazil style for segments such as fashion and accessories. With foods, for instance, adapting to local tastes is crucial,” he explains.
Speaking of crucial, to the professor, having units overseas is a way of adding value to one’s image. “To the franchise holders, those who are present abroad are stronger, better structured and thus pose less of a risk of standing them up,” says Boroni.
On the right track
In addition to being well regarded by franchise holders, internationalization may bring other advantages. “You have the technological and knowledge value that operating in other countries brings, and there is the exchange of information,” says Camargo. “Not to mention the expansion of sales capacity in itself, the placing of one’s products in more markets.” To the managing director of the ABF, moving past the national borders is a natural path to growth. “The brands that make this choice gain strength in the eyes of consumers,” he asserts. “And they prove that they are on the right track towards the future.”
Fast-food chain Giraffas is one example of a company that is present abroad. The fourth largest restaurant chain in Brazil, with 360 points of sale in 24 states and the Federal District, it owns a unit in Miami, United States, and another in Ciudad del Leste, Paraguay. “Foreign countries are part of our expansion plan,” says Cláudio Miccieli, the managing director of Giraffas.
For now, the goal is to concentrate efforts on the United States. “Our inauguration in Miami created lots of buzz,” says Miccieli. “Our goal is to establish our brand in Florida.”
In 2010, Giraffas posted revenues of 520 million reals (US$ 331.4 million). For 2011, the target is to reach 600 million reals (US$ 382.4 million).
Three times a week
Another enterprise that discovered a scenario of great possibilities abroad was Wizard, an English language school chain. The brand, which belongs to Grupo Multi (as do language schools Yázigi, Skill, Apls and Quatrum), has 1,170 units in Brazil and another 30 international ones. Where do they operate? China, Colombia, the United States, Guatemala, England, Ireland, Japan, Mexico and Paraguay.
But how do you teach English in the United States and England? “In this case, the focus is on immigrants and in offering Portuguese language lessons to foreigners,” explains Luísa Siqueira, the International Operations manager at Wizard.
The teaching methodology is the same as the one adopted in Brazil, however the didactic materials are always adapted to the native language of the students. “We have material for Brazilians and for Spanish speakers,” says Luísa.
According to the executive, the habits of each country are observed as well. “In Brazil, the usual thing is to have two one-hour-long lessons each week,” says Luísa. “In Mexico, on the other hand, the standard is to have classes more often, so we offer three lessons each week, lasting two hours each.”
The decision of going international, explains Luísa, was made because there was no more room for growth in strong domestic markets such as São Paulo and Rio de Janeiro. And it arose out of the proposal of a franchisee. “It was an opportunity to attract Brazilian students outside Brazil as well,” she claims. “It was a choice that added to our credibility.”
Wizard’s bi-national franchise holders include entrepreneurs who own schools in Foz do Iguaçu, in the state of Paraná, and in Paraguay, which touches borders with the former. “We also have the example of a Brazilian businessman whose brother is in charge of five out of our eight units in Japan,” says Luísa.
Now, the target is to invest in Central America, Angola and Portugal. Arabs are welcome. “We have been contacted by an interested party in the Emirates,” says Luísa. “We are open to good opportunities anywhere in the world,” she claims.
*Translated by Gabriel Pomerancblum