1 Hope in
Portugal: client focus
operations in at least one country in Latin America or the Caribbean. What is the right moment to invest outside Brazil? Ricardo Camargo, executive director of ABF, and Thelma, from ESPM, advise prudence. “Our first recommendation is for the company to be already providing an excellent service in its home market”, says Camargo. The consul-
tant Paulo Cesar Mauro — president of Global Franchise, a company that works with foreign franchises entering Brazil and Brazilian franchises going international — doesn’t think that you first of all have to exhaust local market growth potential. “Today, the market is global for any company thinking of growing in the medium and long term”.
tionalization are numerous, but there is one standard model in the world of franchises: it is common for the initiative to come from the franchisee — in general, someone that knows and appreciates the brand — and not one of the franchisers. This was how the fast-food chain Vivenda do Camarão (a shrimp eatery) won its first franchise outside Brazil in a shopping mall in the Paraguayan city of Pedro Juan Caballero, on the border with Mato Grosso do Sul: a Brazilian living in Paraguay knocked on the door of the company looking to open a restaurant. The dishes are the same served at the restaurant chain´s more than 150 Brazilian restaurants. The difference is the menu in Spanish. Something similar occurred with the franchisees of the Hope lingerie chain in Portugal and Israel — the latter, a multicultural country where the brand also arrived. But with a difference; the future Israeli partner had never been to Brazil. Interested in opening a lingerie store, the businessman did his research and contacted Hope. “The Brazilian model was a big success there”, rejoices Sylvio Koritowski, apparel production director. “Israel was a pleasant surprise”. Portugal, with 34 Brazil-
ian brands in activity, according to ABF, leads the global map of receivers of national franchises. Next to Angola, it is still an exception in internationalization due to cultural affinities: both countries speak the same language, albeit on different continents (Fisk, O Boticário, Carmen Steffens and Totvs are some of the 17 Brazilian companies that have seen the potential of the Angolan market and licensed franchisees in the African country). The operation of Hope in Portugal has one particularity. Its success, according to the franchiser itself, doesn’t just lie in the affinities, but also in a difference perceived and appreciated by clients: the customer service style of Brazilian retail, which is more personalized and warm than the European standard. “Customer service in Europe is very cold, and we were able to transport the Brazilian warmness and attentiveness to our stores in Portugal”, says Koritowski, brand expansion director. Another peculiar case in the Iberian Peninsula is that of the Nobel bookstores in Spain — more specifically, in Galicia, the Northwest region of Brazil that, on the map, is tucked in right next to Portugal. And the proximity isn’t just on the map: there they speak
galego, a language virtually the same as Portuguese (Portuguese and galego were in fact once the same language). In 2007, Arnoia, the largest book distributor in Galicia, expressed an interest in the business model of Nobel, which already had a franchise in Portugal since 2005 and became master franchisee of the brand. Today, it administers 30 stores. “We plan our expansion only in Portuguese- or Spanish-speaking countries”, says Sérgio Milano Benclowicz, director of the Nobel bookstore network. “Our return is good, because our public is committed to the culture of reading, which helps drive the success of franchisees”. Out of Nobel´s annual revenue of R$185mn last year, 3% came from international units. What these stories illustrate is the importance of being flexible when it comes to seizing opportunities and venturing into other countries. After its international
HaNDout viveNDa Do caMarão
tHe PAtHS for the start of interna-
IN THE SAME LANGUAGE
baptism in Paraguay, Vivenda do Camarão went straight to the US: at the end of 2013 it opened 2 restaurants with the brand Shrimp House in Miami and Coral Springs, in Florida. The menu of the US restaurants illustrates the virtues of flexibility for a fran-
chise. It is more streamlined and spicier than the Brazilian restaurants. “We held tasting tests, in the US, with US, Brazilian and Latin American opinion formers”, says Diego Perri, partner-director. “The best rated dishes were the spicy, seasoned ones”.
2 Vivenda do Camarão in Miami: more pepper
Those taking the lead know what this means. Few Brazilian franchises have achieved such a strong presence abroad as Localiza. In over 20 years of internationalization experience, it now has 57 stores in eight Latin American countries, with a “foreign” fleet of 14k cars. Around 20% of the revenue generated by its franchisees comes from abroad. In this aspect, Localiza is more of an exception than the rule. In general, in the other international Brazilian franchises, this percentage is much less — sometimes, almost insignificant compared to revenues in Brazil. Still, it is an investment considered important since it raises brand awareness and opens up new markets. “Revenue is small, but we have huge interest in our international projection”, says Korytowski, from Hope. In the case of Hering, which posted 2013 revenue of R$2.01bn, the share of international operations is only 1.6%, but has grown 17.3% in the last 12 months. The company will not abandon its presence abroad, despite its relative small size. “Expansion in the international market is part of the company´s growth strategy”, says Loos, director. In other words: when it comes to venturing beyond Brazilian borders, it´s not the size of the immediate revenue that matters. A big factor is the intangible gains of international image and experience in other markets. And Latin America offers Brazilian franchises the most attractive opportunity, right now, to make these gains. revistapib.coM.br
PIB Edition 25 March/April 2014