Pie Face is set to open stores in India after signing a memorandum of understanding agreement with exclusive development partners for the Indian market.
Rick Aylett and Ajay Grover will oversee the operations of Pie Face’s Indian branches and are already familiar with the Indian market.
The Indian stores will further Pie Face’s international expansion plans with the chain already having outlets in New Zealand and the United States.
But the director of Franchise Advisory Centre, Jason Gehrke, told SmartCompany businesses that engage in rapid growth can often face difficulties.
“Rapid growth can be challenging for any franchise system,” he says.
The difficulty of expanding into foreign markets should not be underestimated, Gehrke says.
“For example, the Chinese market is very unique and has not been successful for some Australian businesses that use franchise systems because they have overestimated the market demand for their products and services and underestimated the difficulty of customising their local conditions drastically.”
Gehrke says the Indian market poses fewer difficulties for Australian businesses to break, due to both countries sharing a British heritage when it comes to language and law.
“Key differences (in India and China) are that as a former British colony, India has a very similar legal system to Australia and English is widely spoken, so that can help overcome some of the challenges, but it’s no guarantee.”
Earlier this month, SmartCompany reported several Australian Pie Face franchisees were unhappy, feeling that they had been misled, with their profits allegedly being far less than expected.
Pie Face founder Wayne Homschek denied these claims, saying Pie Face offered good returns to franchisees.
“We have some of the best wholesale margin/pricing that exists in the country, if not the best,” he said.
Gehkre says it is common for businesses to enter overseas markets when it has “reached maturity in its domestic market”.
When deciding which markets to enter, Gehkre says there are usually two routes, with businesses either selecting a country or being approached by people interested in the brand.
“Businesses strategically select a market they want to be in and often select that market because they receive an unsolicited request for a franchise from that market and respond to that request.”
Pie Face chief marketing officer Ben Macpherson says Grover and Aylett will act as the brands point of contact in India, appointing Indian master franchisees for specific territories across the country.
“That’s the reason why we have people on the ground that understand the market, the media nuances, the people and the companies and operators in that. This is a step that ensures, particularly in the India market, that we make the right franchise decisions,” he says.
The success of other international brands and the sheer size of the market made India an appealing destination for Pie Face, Macpherson says.
“The reason we’re interested in the Indian market is because it is potentially a very big and emerging market, and there is a very early development of acceptance of international brands like Starbucks. Getting in their first and early on is very attractive”.
Pie Face does not yet know when the doors of its first Indian stores will open, saying it is more important to set up shop correctly than rush into it.
Pie Face says it is investigating other destinations for the franchise and is currently engaged in negotiations.