A great example to look at is the Minor Food Group in Thailand. They have made a significant business success with second tier US brands such as Swensen’s Ice Cream, Sizzler Steakhouse, Burger King and Dairy Queen, and currently directly own or franchise over 1000 stores in the Southeast Asia region. As a young student in California, I can remember Swensen’s and Sizzler but they have all but disappeared from the scene today. Burger King is still a major brand in the USA but not very successful in the Asia Pacific region. Dairy Queen only experiences limited success compared to Baskin Robbins in the Asia Pacific markets and their restaurants in the USA for the most part are far from attractive.
Have you ever heard of Mister Donuts? It was originally a small US donut chain that never gained traction compared to Dunkin Donuts or Krispy Kreme. But Mister Donuts now is the largest donut chain by far in Japan and very fast growing in Taiwan while making inroads into South Korea and China.
Another interesting case is the Japanese noodle chain, Ajisen Ramen. The Company is based in Kumamoto Japan but very few Japanese ever heard of the brand. Yet it is the dominant Japanese chain in China and growing rapidly there.
So what can we learn from all these examples?
First, you need to choose the right partner. Where you see a successful second tier brand you will see a successful first tier partner! In many cases, no one knew at the time that the partner would grow to be so effective a manager. Driven entrepreneurs make good partners for second tier brands because first tier brands do not want to take the risk of selecting them.
Second, randomness (you may call it “luck”) plays a big role as well. It is very difficult to tell in the beginning which partner will be good when you are a second tier brand because you are usually not able to sign up the large well capitalized partner.
So if you are a second tier player, it is better to search for the driven entrepreneur, start small and build from there. That is after all how all successful restaurants chains start in the first place!