A sustainable business model built on years of hands-on experience, patience, and gut feelings – those are the building blocks of Nelson Franchise. Its brand Nelson’s, one of the most successful homegrown brands, can be found in 16 countries with half of its almost 1,000 global outlets based in the Middle East.
Nelson’s founder and managing director Nelson Kwok shares the five Ps that underpin Nelson’s success: “The first P is Product. Do you have the right products? How’s the packaging? Is it unique? The second P is Pricing. It is affordable? Third, Place – as always, it’s location, location, location. Fourth is People, the consumer and management team. Fifth is Promotion.”
He stresses the importance of the five Ps: “You cannot be short of one. The most challenging is having the ‘People’.”
Nelson’s started in 1985 but for the first decade, it was very much a local player. Then it discovered the joys of accelerated expansion via franchising, promptly overcoming the manpower and capital constraints that had capped its organic growth. Nelson’s adopted the single-unit franchisee route, opting to work only with a master franchisee per country, except in huge countries like China. In Malaysia, it works with state master franchisees.
Nelson’s very first franchised outlet was in Penang 1997, its maiden venture out of the Klang Valley. The success of that outlet drew the attention of individuals wishing to set up their own outlets in other parts of the country. Its first overseas outlet was in Indonesia.
Kwok regards the years spent as a hands-on operator as critical – it is the daily grind, the experience facing numerous challenges and learning from mistakes, that are the building blocks in the development of a sustainable profitable venture.
“There’ll be a lot of challenges and you’ll make a lot of mistakes… But once you have a successful business model, you may want to move on to the next stage, that is, expansion, either on your own or through a joint venture, or share it through a franchise system,” Kwok says.
He laments the prevailing desire and expectation among the youths of today – that big success can be achieved with minimal effort. “Many new graduates want to start their own business but they don’t want to start small and put in the hard work,” he notes.
Kwok believes the best way to attract potential business partners, or franchisees, is to have a successful outlet, strategically located in a high-traffic shopping mall, as a showcase of the business’ potential. As an example, he cites the success of The Chicken Rice Shop’s outlet in MidValley Megamall as the catalyst for the chain’s growth.
For Nelson’s, its outlet in Sungei Wang was what drew its Saudi partner to the franchise. After 17 years, the partnership is still strong and Saudi Arabia remains Nelson’s most successful overseas market, where it has a whooping 500 outlets.
Kwok recalled the first time he met the Saudi master franchisee. “He couldn’t speak English. We spoke using body language. He was a tourist to Malaysia, tried the product at our outlet in Sungei Wang and liked it. Later, he brought along family members who could speak English. It took about 1.5 years to close the deal.”
“That’s one thing I always highlight to people who want to expand overseas. You must be patient. Do not rush things. When they come to see you, it doesn’t mean you’ll close the sales the next day!” he says, adding that the shortest time Nelson’s had taken to close an overseas deal was four months.
He also stresses on the importance of travelling to and exploring the market one wants to expand into. “You must travel and find out about the market’s culture, the regulations, behaviour of the consumers… before appointing a franchisee,” he says.
For a franchise business, having the right franchisees, especially the master franchisees for overseas markets, is vital. “You need to take time to find the right partner.” He says this is only apparent through interactions and numerous mutual visits.
Gut feelings also play a role. “Your instincts will tell you if that person will be a good partner for you. And of course you have to ensure if he’s capable financially. Does he have the interest to run the business, preferably hands on, and does he have the local knowledge and network?”
Kwok reiterates: “To be able to venture overseas successfully, the owners of the business must travel to study the potential markets and be very patient. Doing international trade is not an overnight affair.”
Besides being transferable, some localisation to the business model may be required.
“You must accept changes to suit the local markets, the local tastes. Here, we flavour our corn with butter or margarine. In Saudi Arabia, they add in lime as well because that’s how the Saudis like it. And why not?” He says Nelson’s key product is corn, which it supplies to its franchisees from its own farms in Malaysia. Other than that, the franchisees are free to localise content to lower costs.
He encourages Malaysian entrepreneurs, especially business model owners, to travel extensively and to take part in exhibitions such as international franchise shows. “Don’t just sit back in Malaysia. Having an international network is important. And you can build that through international exhibitions.”
He also urges entrepreneurs to join local NGOs and trade associations. “This is networking. This is where you can find potential customers overseas. By being part of a trade association, you’ll get instant recognition as a proven business in Malaysia. Don’t just focus on business. Contributing to the trade associations is also helpful for your business expansion overseas.”
Talking Heads: Creating conversations around Malaysians who have successfully gone global – Produced by the Economic Transformation Programme.