International Trade and Global Business

 

Franchises are a Good Way to Go Global

U.S. women may be underrepresented in the ranks of top executives that engage in cross-border business, but those who do perform with distinction.  Take Yoshino Nakajima, vice president of international at Home Instead Senior Care of Omaha, Nebraska.

Hard to get more middle America than Omaha, but for more than 10 years Home Instead has been busy opening more than 1100 franchises around the world. Nakajima tells the story of Paul Hogan, who got the idea for the business while looking after his 100-year-old grandmother.  In a way she had it better than others of her generation, having lots of company consisting of 15 kids and 55 grandkids. Still, there were gaps in her daily schedule.  Paul saw a need and, later, an opportunity.

Yoshino was living in Poland, where she owned a successful Blimpie franchise.  She read an article about Paul, called him, and told him she thought there would be a big demand in Japan, where the population was rapidly aging. He hired her to stand up his international franchise arm. 

The concept of companionship for senior citizens did not exist in Japan.  They had to do a lot of explaining, and even created a new word in the Japanese language—konpanyanshippu.  Nakajima called press conferences in Tokyo to talk about it.  Now, the company has more than 100 franchises in the country--through a master franchise agreement with a leading service provider.  Konpanyanshippu has become part of everyday parlance.

Fine tune your business model to local cultures

Europe was tougher because of resistance against paying top dollar for top service.  So, Nakajima reclassified one service into three different levels as a way for clients to save money.  Cost was a significant issue in 2008-2009 during the worldwide recession, but two brothers in Portugal saw a wider need for elder care while taking care of their mother.  The key in Portugal and elsewhere in Europe was to offer a range of service from basic to more extensive.  Europeans liked the choices, and the number of franchises has grown.  The UK leads in the number of European franchises with more than 100. Franchisers earn an annual fee from each franchisee, which includes use of the brand, training on service delivery, marketing and communications advice, help managing the business and other kinds of support. It’s a great business model.

It took a while, but earlier this year Nakajima and Home Instead opened its first franchises in China, specifically Wuhan and Shenzhen.  While not the biggest cities in China, they are big enough and may be easier for foreigners to do business in and get government support. Franchising is actually popular in the Chinese business community because it allows Chinese ownership, while paying foreigners the franchise fee. Although the one child policy was recently changed to allow for more than one child, it will take a generation to double the number of potential caregivers for their children.  There’s also evidence that parents eligible to have multiple children are opting not to have them, suggesting that services like Home Instead will have plenty of customers for the foreseeable future.

“Our approach in each country is to conform our business model to local norms,” said Nakajima.  In China this has meant dealing with the vertical nature of most Chinese housing.  “This has actually been good for us in Chinese cities,” explained Nakajima, because rooms can be rented in the high rises that allow a number of seniors to gather together and enjoy a meal and some socializing. 

The increase in Alzheimer’s disease has created an added challenge for the elderly and their families.  Home Instead has responded by working with medical experts in the U.S. to develop training programs to help franchisees train staff members in how to better care for people with this disease and other age-related cognitive impairments.

Nakajima credits international travel earlier in her life for preparing her for the world of international business.  “I’m comfortable working in different cultures.  I find it endlessly fascinating and rewarding.”

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