As unique as the jandal

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Only New Zealand has the jandal. Apparently manufacturing of the jandal started in the garage of one Morris Yock in 1957. The unique name being a combination of the words “Japanese” and “sandal”, which Yock sought to trademark. Though, not to get in the way of a good story, it is contested that jandals had been imported from Japan from as early as the 1940s.

So, “What does this have to do with franchising,” you ask? Well, just as the rest of the world has sandals, slippers, thongs, and flip flops, but not jandals, franchising is a successful worldwide business model, but successful franchising in New Zealand requires a unique New Zealand approach.

You need to meet the local market

There needs to be market demand for a product, service or offering.

In New Zealand, locally grown brands account for 71% of the 590 franchise brands reported in the Franchising New Zealand 2021 survey.

Many of these brands grew through franchising based on the success of an existing business and therefore established consumer demand, or love for a product or service – homegrown brands based on homegrown products.

Although Kiwis also love new ideas and products, not all imported systems prosper. Those that have, recognise two important factors:

1. Localise the product – When McDonald’s entered the New Zealand market in 1976, they did so by adopting the suggestion of their Kiwi franchisee to localize the offer, adding the ‘Kiwiburger’, which included an egg and beetroot, to the menu.

2. Products change, brands remain – Successful franchise brands create consumer demand that transcends the product offering. The great quote from Ray Croc when asked what McDonald’s would be selling in the future encapsulates it very well: “I didn’t know what we would be selling in the year 2000, but whatever it was we would be selling the most of it.”

The nuances of the New Zealand market

From observation, perhaps the single biggest key to success for imported franchise brands in New Zealand lies in their ability to truly appreciate the size and dynamics of the market.

At just over 5 million people, the New Zealand population is relatively small. I had a reminder of this just last week whilst working in Sydney, literally the population of Auckland passed by me in an hour! Comparing foot traffic in Sydney to Auckland, or a large city like London, provides a wake-up call that New Zealand is a small market.

Looking at population density, other than Auckland, our population is spread out. So franchises need to think about build cost, minimum size of market and how to make the model work in ways that they would not need to overseas.

The numbers need to work locally

Foreign brands that look at the New Zealand market and believe the economics for their systems will be similar do so at their own peril.

Even brands originating from New Zealand’s closest neighbour, Australia, will find very different economics on both a franchisee and system basis.

Wage and labour costs are very different, input costs will vary as well as construction and property costs.

Physical limitations affecting reach within a particular franchisee’s territory could place considerable limits on revenue when compared to overseas markets.

Additionally, foreign franchisors need to be conscious of the market for franchisees, their ability to fund, and human capital requirements.

However, there is good reason that New Zealand is the most franchised country per capita in the world. The opportunities lie in the fact that it’s often easy to stand out in a small market, that New Zealander’s are inquisitive as consumers, innovative and entrepreneurial.

Just like the jandal, franchising in New Zealand is unique but popular and very functional.

Related: Why franchising matters to the New Zealand economy

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Nathan Bonney
Nathan Bonney
Director of Iridium Partners. He can be reached at nathan@iridium.net.nz or 0275-393-022

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