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ENTREPRENEURSHIP
NINA SUEBSUKCHAROEN
Lange: Franchising is not entrepreneurial |
Franchising is struggling in Thailand because most Asian businesspeople have difficulty transforming themselves into good followers, said Sunbelt Asia Company managing director Greg Lange.
The company, part of the international Sunbelt business brokerage group, saw its gross sales grow by as much as 80% last year. Business transfers and brokerage are still its main income earners.
The accepted view that owning a franchise means you are your own boss is not completely correct, said Mr Lange. Ultimately, the final say lies with the franchiser.
''They are going to be coming out and checking up on you month to month and giving you a report and there is always something that's going to be wrong,'' he says. ''You have to have a thick skin. You have to be a yes person; you can't really think out of the box because you have to follow the system.''
Naravadee Waravanitcha, Mr Lange's wife and business partner, agreed that a good franchisee has to be a good follower. ''You cannot be a good entrepreneur, maybe if you are too good an entrepreneur then you are not a good franchisee because you always have your own ideas that you want to implement but in order to preserve the brand, preserve the identity, you have to follow the system.''
The Siam Paragon branch of Sunrise Tacos is one of the businesses launched by Bangkok-based American entrepreneur Greg Lange. |
Mr Lange added that Ms Naravadee, who owns a few franchises including Squeeze, Spicchio Pizza, Chester's Grill and Coffee World, had some difficulties initially.
But franchisees have to adjust because franchisers do not like to be told what should be done because they have already conducted research and development and made those very mistakes.
Franchisers are very selective; for example Atlanta Bread went through 6,000 names before selecting a candidate. ''You know that is a lot of people to interview, a lot of due diligence. So there are a lot of people who say, 'Hey, I want to buy this franchise' but the franchiser is very picky.''
Sunbelt Asia has met several people who have franchises in other countries but after failing to find the right candidate, the master franchisee decided to launch the business here on his or her own.
''The reason why is that if you get the wrong master franchisee in an area, it's kind of scorched earth; you can never go back to that area,'' said Mr Lange.
Sunbelt Asia was launched in Indonesia by a young couple with his company having the master franchise rights for all of Southeast Asia.
''They went after huge transactions such as hospitals and didn't really follow the main street business that drives small businesses. Now when a potential franchisee looks at Indonesia five years later, they say, 'There was a Sunbelt Asia at one time in Indonesia'.''
Mr Lange also ran into problems when helping the Subway sandwich company relaunch in Thailand with almost all of the 350 applicants backing out when they realised that there was a Subway here five years earlier that had failed.
A handful of people were interested in going to the next step but the franchisers felt they were not suitable.
His wife suggested that Subway was a good product and was worth the risk of opening an outlet. The launched the business and today are major shareholders in six locations.
Another obstacle dragging down franchising in Thailand is the high cost of internationally famous franchises.
''We heard a lot of rumours that this group or that group is going to bring in this product,'' said Mr Lange. ''Because of the huge investment and the selection criteria the franchisers implement, you don't see that many international franchises have come to Thailand lately but you are seeing franchisers themselves are investing in this country.''
Examples of this include Starbucks, which is expanding on its own after having worked with a franchisee, and Mos Burger which has outlets at Central World and Siam Paragon.
Another emerging trend is that some Thai businessmen have started launching their own franchises. Mr Lange and his wife are examples of this with Sunrise Tacos. The eatery now has four locations after opening six months ago.
Sunbelt Asia is working on 20 such business transfers.
''At the end of the day the person who has the advantage is one who is looking to purchase an existing business that has a system, just like a franchise,'' said Mr Lange. ''Good businesses are being transferred because in a bad economy they are looking for a proven system; they are not going to take a gamble on something starting up.''
Franchising is big business in the US with Mr Lange saying that one out of every three transactions is done by someone who is involved in franchising.
While food is mainly thought of in franchising, real estate firms and service-oriented businesses such as plumbing and hairdressing exist in the US.
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