Expansion is always on the minds of franchisors, and when you’ve saturated the US market, the only thing to do is move into new countries. There’s a growing trend of franchises expanding into Mexico as of late. Its close proximity to the US makes it easy to oversee expansion plans, and the market is proving to be ready for certain brands.
The Children’s Place
Children’s clothing brand The Children’s Place recently announced plans to partner with department store El Palacio de Hierro in its Mexican expansion. The first stores are underway, and The Children’s Place plans to open 35 stores across the country over time.
This is far from the brand’s first foray into other countries: The Children’s Place has 1,086 stores in the United States, Canada, and Puerto Rico, and 85 international stores open and operated by its franchise partners in 11 countries.
While supermarket franchise H-E-B is far from new to opening stores in Mexico, it is leading the pack in the supermarket industry. While most American grocery stores stay close to home, H-E-B has been unafraid to forge new partnerships south of the border. It has about 45 stores and two distribution centers in Mexico, operating either under the H-E-B name or discount brand Mi Tienda del Ahorro.
H-E-B has sales volume in Mexico around $1.2 billion, and employs 9,000 people there.
Dunkin’ Donuts is betting money that Mexicans will trade their churros for donuts. The donut franchise brand recently signed an agreement with franchise group Grupo CF Del Noroeste to develop 125 new stores in the coming years. The first will open in Mexico City. In addition to its core offerings of donuts, sandwiches, croissants, and coffee drinks, the brand will also offer regional items to cater to Mexico’s tastes.
Dunkin’ Donuts currently has over 11,500 locations in 40 countries around the world.
A Word to the Wise
While expansion into other countries is often essential for a franchise’s growth, there are reasons to think twice. Culture is a big one. Many brands have moved into other markets without conducting research to understand how their products will be received in another culture, and failed as a result.
And then there are the PR gaffes to manage. Recently, a McDonald’s in Mexico City was shut down after a rat’s head was found in a customer’s burger. Keeping quality consistent across borders is a challenge that many franchisors simply aren’t ready to take on.
Susan Payton is the President of Egg Marketing & Communications, a marketing firm specializing in content writing and social media management. She’s written three business books, including How to Get More Customers With Press Releases, and frequently blogs about small business and marketing on sites including Forbes, AllBusiness, The Marketing Eggspert Blog, and Tweak Your Biz. Follow her on Twitter @eggmarketing.