MASTER, REGIONAL AND INTERNATIONAL FRANCHISING REPORT: FRANCHISES, BUSINESS, Global CULTURE Franchise www.globalfranchisemagazine.com ASIA WHAT WORKS, WHAT DOESN’T. HOW TO JOIN THE FRANCHISES EARNING SUCCESS Ichiro Fujita advises on franchising in Japan Japan Report Receptive to Western ideas and culture, Japan has long been a target destination for Western franchisors. However, brands eager to set up shop in this lively market should look carefully before they leap; this country may appear thoroughly Westernized, but cultural differences run deep and these should be properly understood before that first step Eastwards is taken. Ichiro Fujita, who assisted us with this project, is President/CEO of I. Fujita International, Inc, and has long experience of assisting incoming brands to franchise Global in Japan – he is an ideal guide for anyone thinking of dipping a Franchise toe in the water. ASIA Ross ADVERTISEMENT SALES DIRECTOR Mark Forsyth +44 1323 471291 [email protected] GROUP ADVERTISEMENT MANAGER Richard Davies +44 1323 471291 [email protected] SENIOR ACCOUNTS MANAGER Neil Phillips +44 1323 471291 [email protected] SENIOR ACCOUNTS MANAGER Tom Hepton +44 1206 505487 [email protected] ACCOUNT MANAGER Craig Bartlett +44 1323 471291 [email protected] HEAD OF EDITORIAL (BUSINESS) Fae Gilfillan [email protected] EDITOR Ross Gilfillan [email protected] ART DIRECTOR Lloyd Oxley CREDIT CONTROL Sue Carr +44 1206 505903 PUBLISHER Matthew Tudor globalfranchisemagazine.com Global Franchise ASIA Japan hat services do you offer expanding brands? Our consulting company assists US franchisors to facilitateW market entry specifically into Japan. Over 30 years of operations, we have helped well over 100 companies to identify their Franchise master licensees in Japan. When was franchising established in Japan? In the year 1963 a confectionery store called ‘Fujiya Confectionery’ launched a franchise Japan outlet in Japan. Fujiya later became the master licensee for Baskin Robbins Ice Cream, the first Ichiro Fujita is your guide to how U.S. franchisor to do business in Japan. franchising is carried on in this energetic country. Find out what kind How healthy is franchising of franchise works – and what does in Japan just now? not – in this $260 billion franchise Currently, there are 1,335 franchisors in Japan market, right here of which 500 franchisors belong to the Japan Franchise Association. Franchisors operate over 263,000 stores, which generate a USD260 billion dollar market. The upcoming 2020 “Compared to strict Olympics in Tokyo, together with a very healthy Japanese economy, provide a solid basis for the U.S. regulations, the growth of franchising in Japan. Japanese government How receptive is Japan to incoming franchises? does not impose any The Japanese admire and respect foreign brands, products and services, and welcome incoming brands from overseas. specific franchise rules How successful are the and regulations” franchises Japan exports? It depends on the individual concepts, the categories and the capability of the master franchisee in Japan. Most of all, success depends on how adaptable the brand is to the Japanese market. For instance, 7-Eleven became an instant success, replacing miscellaneous stores with some 30,000 units; Curves fitness center met the requirement for women-only and senior women’s fitness centers in Japan; Anytime Fitness was successful since it became the convenient neighborhood fitness solution for Japanese seeking day-to-day exercise. McDonald’s met the needs of a growing burger generation, while Kentucky Fried Chicken did the same for Japanese who love fried chicken. globalfranchisemagazine.com globalfranchisemagazine.com What should franchisors What sort of adaptations may expanding to Japan be have to be made to a Western aware of in terms of rules food brand planning to and regulations? franchise in Japan? Compared to strict U.S. regulations, the An incoming brand needs to minimize Japanese government does not impose any its space due to a limited availability of specific franchise rules and regulations. retail space in Japan. Also, the portion They expect the master franchisor and sizes of Western foods need to be scaled master franchisee to comply with local down. Flavor adjustments may need to commercial rules and regulations. be made in terms of cutting sweetness and saltiness. What cultural differences should be on their radar? What sort of franchise concept The Japanese decision-making might not work in Japan? process takes time and is quite different Concepts which require a large from that of American or Western space and many staff, and those companies. The majority of potential which require the majority of master franchise candidates will be products to be imported. All of the corporations instead of individual above leads to high investment and entrepreneurs. For this reason, in many high cost of goods. cases, decisions are made on a group basis, based on mutual consensus, rather than How do you see the future of being a single decision by CEO. In Japanese franchising in Japan? corporations, the middle management The future of franchising in Japan normally will be in charge of specifics. is bright. The Japanese government, the Japanese Small Business How well do Western food Administration and Japan Franchise franchises work in Japan? Association; as well as JETRO (Japan Again, this depends on the category. External Trade Organization) are all Burgers, chicken and pizza concepts supporting the growth of both work well; Mexican is still an emerging existing franchises in Japan as well category. Café is a strong category due as that of Western franchise brands. to high consumption of coffee in Japan. There are increasing numbers of The Japanese love confectionery so the independent entrepreneurs as well premium ice cream category works as individual stores who wish to grow well in Japan. through franchising. Interested in franchising in Japan? Contact the Japan Franchise Association www.jfa-fc.or.jp/particle/110.html globalfranchisemagazine.com Global Franchise Franchises in Japan ASIA 10 Successful Franchise Brands Western brands coming to Japan will face stiff competition on two fronts. Franchising is well-established in the country and a clutch of Western brands have a strong foothold. Among familiar names you will see often sandwiched between Japanese ramen and noodle outlets are big players McDonald's, KFC, Burger King, Baskin Robbins, Subway, Domino's, Pizza Hut and Krispy Kreme donuts. Anytime Fitness and Curves are making inroads into the fitness market. Also making their marks are Shake Shack, Carl's Jr, Honolulu Coffee, 800 Degrees pizzeria, Orangetheory Fitness, Hooters, Fatburger, The Counter Burger and Umami Burger. Franchising is a two-way street in Japan and local concepts are franchising in South East Asia and beyond. Here is a selection of food and coffee concepts which have struck a chord with local consumers globalfranchisemagazine.com Global Franchise 1. Ikinari Steak ASIA This popular steak house chain serves a variety of cuts from high quality beef stock and backs it up with side orders of salads, soup and garlic rice. The first Ikinari steakhouse opened in Tokyo in December 2013, and the business now has over 280 locations throughout Japan (as of July 2018). Now the most popular steak restaurant in Japan, Ikinari Steak opened its first U.S. location in February 2017, and has eight locations throughout Manhattan. ikinaristeak.com 2. Torikizoku Torikizoku, a casual eating chain established in Osaka, now has locations all over Japan. It specializes in Yakitori, a Japanese type of skewered chicken. The 3. Mos Burger chicken is locally raised and its preparation Fast-casual restaurant chain MOS Burger is now the involves skewering the meat with kushi, second-largest fast-food franchise in Japan after the name of the standard hamburger offered by the before grilling over a charcoal fire and McDonald's Japan, and owns numerous overseas restaurant, being its first product when it opened in serving with a special sauce. A good outlets over East Asia, including Taiwan, Singapore, 1972. In April 2011, MOS Burger opened its first store choice for gourmets on budgets, popular Hong Kong, Thailand, Indonesia, Australia, South at Sunnybank Plaza, in Brisbane, Australia. As of May Torikizoku menu items include the standard Korea and, until 2005, Hawaii. MOS Burger is also 2016, the company has six stores in Australia. mos.jp yakitori fare Momo (chicken thigh) and Mune (chicken breast). Pieces of green onions are sandwiched between chicken breasts or thighs, the sweetness of the CAPITAL green onion complementing the chicken's TOKYO umami. torikizoku.co.jp PRIMARY LANGUAGE JAPANESE POPULATION 127.25m POPULATION GROWTH Japan -0.1% POPULATION NEED TO KNOW NEED TO UNDER 15 313.4% UNEMPLOYMENT 4.4% All Need to Know facts courtesy of the IFA globalfranchisemagazine.com globalfranchisemagazine.com Global Franchise ASIA 5. Doutor Coffee European-style coffee house chain Doutor Coffee served its first cup in Harajuku on 18 April 1980. Since then, the company has opened over 900 locations in Japan, and has begun expansion in Taiwan and Singapore. Doutor Coffee has a total of over 1,300 outlets. The concept opened its own coffee plantation in 1991 in Kona District, Hawaii and a second plantation was established in 1995. dotourcoffee.com.sg GDP (PPP, $BN) 4.704 7. Yoshinoya Yoshinoya is a Japanese multinational fast food business, and the second- largest chain of gyūdon (beef bowl) restaurants. The long-established concept dates back to 1899 and has as its motto "Tasty, low-priced, and GDP REAL quick". Headquartered in Kita, Tokyo, Yoshinoya opened its first 24-hour GROWTH % store in 1952, and its first franchised outlet in Shinsaibashi, in 1968. In 2 1975, the first American store was opened in Colorado.yoshinoya.com CORPORATE Japan INCOME TAX 38.01% NEED TO KNOW NEED TO INFLATION RATE % 6. Komeda Coffee 3.1 Coffee shops are well established in Japan.