FOCUS; Japan Franchise Market

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Think Life. Think Franchise.
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FOCUS:
Japan
April 2016

FOCUS: Japan Franchise Market
Benefits of opening a
franchise in Japan
Japan Franchise
Law
Understanding
Japanese business
manners
Japan Hot franchise
sectors
Do you have to
open your
franchise in
Tokyo?

Japan Market
Overview of the Market.
At a Glance
Japan’s economy is recovering moderately with the economic
growth forecast for 2014 at 1.4%. Consumer confidence is
strong and consumption has been supported by limited to no
individual debt.
Due to the size, status and
sophistication of the Japanese
market, it is regarded as a
trend-setter and origin of content
for all Asia. Because of this, Japan
offers a great test bed for
franchisors wishing to enter Asia
as a whole.
The World Bank reported that
consumption in 2012 was 61% of
GDP.. Retail food sales were just
shy of $500 billion and
expenditure was $3,735 per
capita, representing the second
biggest expense behind housing.
In October 2012 there were 1,286
franchising chains with 245,263
outlets. 2012 total sales were
¥22.2 trillion equating to around
10% of overall retail sales.
In order, the biggest sectors:
1. Retail.
2. Convenience store.
3. Restaurant.
4. Service sector.
Approximately 39.6% of total
turnover at franchised outlets is
from convenience stores (CVS)
and about 18.1% from food
service chains. The biggest
growth (14% increase)
2011-2012, was seen in the
internet and TV shopping
sectors.
Key Franchise Points
* 23% of household expenditure goes on food compared to
5-7% in the US and 10-12% in Europe.

Japan Market
History of the Market.
The franchise industry started in
1963. It was originally developed
in the QSR sector by a Japanese
restaurant company in Kyoto. The
franchising industry has since
become a multi-billion dollar
industry across a wide range of
sectors.
Overseas franchising has helped
the development of Japan's
franchise industry since the early
1970's and the number of
companies that have chain
headquarters located in Japan has
surged since the appearance of
foreign capital companies.
Over the years Japanese
consumers have become open to
overseas franchise concepts
although care must be taken to
match products/services to local
tastes, culture and thinking.
Foreign franchising businesses
should not always think Tokyo,
Japan has a choice of economic
regions, as will be discussed later
in this edition, each with their
individual benefits and slightly
different tastes.
There are a number of ways to
enter the market:
1. Establish an office in Japan
and open a corporately
owned subsidiary.
2. Enter into joint venture
partnership.
3. Sign a Master franchise
agreement.
4. Run a test bed shop via an
individual franchisee.
Key Franchise Points
* Opening an office in Japan requires a Japanese registered
Director however a satellite office can be opened by a foreigner

Chain name & LOGO
Tokyo Stock Exchange Company !
Company Profile
BINCHO OHGIYA is part of multi-brand owner Via Holdings (7918:Tokyo Stock Exchange).
With over 20 years experience and over 580 stores in Japan their leading Yakitori style restaurant chain
is ready for International development. BINCHO OHGIYA is a new Type of Yakitori (Chicken Kebab)
Specialty Store. It makes advantageous use of the good things about the original type of yakitori stores
while also acquiring new customer segments of families and women, and going beyond that to include
the demand for take-out yakitori.
Area Franchisees are sought from a company which is managing a food service business and has the
ability to understand the local market. Financial capability of development and funds for more than 8
stores is desirable. A franchisee can have confidence in the ongoing support from this company.
SALES POINTS
√ Well experienced company
√ Continuing development of new products
√ Grill techniques and proprietary sauces
Full training and support provided including:
• "Grill Master" Certification System
• "Heartfelt Hospitality Master" System
• Management systems
√ Overwhelming product appeal

Japan Market
Japanese Consumers.
The biggest consumers are the
elderly population (accounting for
44% of all consumer spending)
and young single people. The
seniors market in Japan can not
be underestimated. With 22% of
the population over 60 and the
movement of retired people back
into convenient urban areas,
tailored products targeting this
group will enjoy a growing
market. Domestic retailers have
responded to this market through
increased home delivery, online
shopping, mobile services and
segmented promotions.
they are highly food-educated. A
selling point for convenience
stores is to have a high turnover of
products so the Japanese are used
to new experiences and
innovative products.
Japanese consumers are also
extremely health conscious
consumers. There has always been
a culture of health focused foods
and they have a strong belief in
foods with health benefits.
Products that are calorie free, fat
free and/or carbohydrate free will
remain popular.
Japanese consumers seek good
quality, appetising and healthy
food. Since the 1960's the
Japanese diet has become more
global and willingness to
experiment combined with travel
opportunities means
Key Franchise Points
* The biggest consumers are the elderly population accounting
for 44% of all consumer spending.

Japan Market
Japanese Tastes.
The most popular savoury tastes :
* Soy sauce.
* Sesame.
* Salt.
* Consomme.
* Seaweed.
* Curry.
Recently there has been an
increase in demand for vinegar,
cheese, horseradish, spicy flavours
such as chili and pepper; and
flavours that can replace or
simulate the taste of salt.
Japanese consumers are regularly
exposed to various foods and
flavours from around the world so
new, interesting global brands are
popular. Although Japanese love
their original flavours, franchisors
often blend their existing recipes
with Japanese flavours to make
them less unfamiliar. These
cross-over flavours are also
becoming increasingly popular
and trendy amongst domestic
food manufacturers.
Main purchase decision drivers:
* Easy to prepare, consume and
dispose of.
* Quality and freshness.
* Healthy, low-calorie and
nutritious.
* Convenient and accessible.
* Innovative packaging.
* Packaging and in-store
marketing.
A well-thought out marketing
strategy should heed the above
drivers along with innovative
design, portion size, QR codes and
mobile coupons.
As with any market, it is important
to link your product benefits and
experience with local consumer
buying behaviour. An
understanding of culture, values,
beliefs, tastes and buyer
psychology can be indispensable.
Key Franchise Points
* Doughnuts and Popcorn are a huge trend at the time of
writing.

Japan Market
The Way In.
For franchisors, pop-up stores or
an experiential campaign
combined with solid marketing is
an effective way to introduce your
product, gauge the market and
gather essential feedback before
full scale entry.
For brand licensing, export stores
and high end supermarkets are a
good entry point though an
understanding of the distribution
system is needed. In addition to
about 200 single stores, there are
around 900 chain owned specialty
supermarkets that stock a range
of foreign brands.
Partners/Masters:
potential. Many foreign
franchisors have stressed that in
order to conduct business in
Japan it is essential to have a
business partner with a deep
understanding of the Japanese
market.
There are a number of large
Japanese companies very
receptive to partnering with
foreign franchise concepts at all
stages of development-not only
companies who have a large
overseas domestic
footprint-wdi.co.jp is one good
example. When such business
Japan can serve as a launch pad
for the rest of the Asian market.
Identifying the right partner in
Japan does require time and effort
and Japanese partners/masters
usually want to see a business
plan that has a clear marketing
strategy or strong growth
partnerships are successful, Japan
can serve as a launch pad for the
rest of the Asian market.
Key Franchise Points
* Have a clearly defined marketing strategy and well-developed
business plan.

Franchise Sectors
Food & Eating Out.
Overview
Despite the global economic situation Japan remains a solid market for
luxury packaged products and gourmet foods. This is mainly due to
Japan having a cultural adversity to debt, so unlike most western
countries the individual’s debt to savings ratio is very positive.
In terms of eating out we are seeing a new trend in price conscious
consumers and the market is reacting. In a country where quality has
always been valued over cost, price orientated campaigns are now an
integral part of promotion.
QSR restaurants, franchise restaurants, cafes and home delivery
businesses have been less affected by this lifestyle change compared
to independent one site owners, so there exists an opening for
overseas franchisors who have a strong domestic base. With people
also entertaining more at home there remains good opportunities to
sell quality, store bought produce.
Other growth food sectors for franchises to consider:
Health foods.
Ready-to-eat foods.
Organic and fair-trade products.
Frozen foods.
Private brands.
Desserts.
Summary
Travel opportunities, curiosity, media influence and existing products
means a global lifestyle is desirable in Japan and this rolls over into
their perception of food.
Japanese people love new experiences and exciting flavours so quality
foods from the USA and Europe sell well. The increased consumption of
foreign food has also created a knock-on increase in demand for
foreign ingredients.

Japan Market
Final Thoughts.
The Bottom Line
The sophistication, infrastructure, economy and amount of
spending can not be surpassed in Asia. The consumers are open
to exciting new experiences yet there are still few brands in
Japan compared to other Asian countries. One reason for this
could be the language problem, however with the number of
potential partners in Japan who have overseas experience and
the drive by the government to globalise more, this should not
be seen as a barrier to entry.
To conclude: The underlying wealth and the size of the market
means Japan has to be on every franchisor's radar as an entry
point into Asia. With the right knowledge and targeting a brand
can become successful and quickly expand across Japan; if a
brand becomes trendy, Japan can generate enormous rewards.
Franchise Meets reckons 8/10.

Chain name & LOGO
World’ s first Grilled squid QSR !
Company Profile
GANSO TOKYO is the World’ s first Grilled squid on a stick QSR. They hold a Japan patent for the
serving of skewered squid.
No preparation is needed for the food so there is very low food loss. The store format can be operated
by 1 person so labour overheads are reduced. The franchise fee and store requires very low capital to
open and net profit margin is at a proven 50%. The menu has over 100 items that can be chosen from
and adapted to local tastes, and the format is also available as a mobile unit.
They have 38 stores in Japan and are very keen to move into most countries in Asia. As there is little
preparation and cooking ability required the concept can be easily opened. Training will take place in
Japan and sauces will be bought from the franchisor, other ingredients can be sourced locally.
SALES POINTS
√ Flexible format and products
√ Can be operated by 1 person
√ High margins of 67.2%
Full training and support provided including:
• Cooking techniques
• Sourcing suppliers
• Store reform
• Menu design/Localising products
√ Small space required

Franchise Sectors
Cosmetics & Toiletries.
As with the food market, cosmetics are a fast changing, trend moving
industry where favourable media coverage of a new brand can quickly
open a billion yen market.
Japan's cosmetics and toiletries market was estimated to be around
$18 billion in 2013 with imports having grown at an average of 9.5%
since 2001. The domestic brand, Shiseido, maintains the top position in
beauty and personal care.
Skin care and hair products were the largest import categories in dollar
terms followed by make-up. The leading channels are drugstores,
online purchases and supermarkets.
With the elderly population in Japan products targeting these
consumers will be a growth market but specific segments within this
market will have different potentials if not fully researched. As an
example, the fastest growth category in 2014 was anti-ageing though
this growth was predominately amongst younger and middle-aged
women.
For the seniors there is more appeal in products that have added
vitamins, collagen or natural properties therefore marketing strategies
have to be carefully and appropriately targeted.
Following the global trend, Japan has shown growth potential in the
organic sector. This ties in particularly well with Japanese culture and
thinking.
Summary
Japan is the second biggest cosmetic market in the world and the
market is in a stable condition. Skin care products lead the industry.
There are good opportunities for brands across the board and
particularly for bespoke niche products that focus on natural elements.
It is highly recommended franchise owners do their desktop research
and then confirm findings with a Japan consultant.

Japan's Regions
Do you have to open your franchise in Tokyo?
Tokyo and surrounding area
Opening a new franchise in any country takes effort and time. But
location, location, location is always key. Using a Japan franchise
consultant who can advise you on primary and secondary locations to
open your franchise is always a good idea.
Tokyo and the Surrounding Area:
Tokyo is the first choice for many franchisors though due to the high
costs of opening an outlet it should not be assumed to be the only
choice for a company taking its first steps into Japan. Being the capital
however, it is the centre of government, business, fashion and culture.
The region centred around the capital is known as the Kanto region
and produces 40% of Japanese economic strength. It has a population
of 13 million and the main metro area is surrounded by the suburb
prefectures of Kanagawa, Saitama, and Chiba giving a total population
of over 35 million-roughly equivalent to the New York and Los Angeles
metropolitan areas combined.
Tokyo has a well developed transport system and airport links.
With the elderly population in Japan products targeting these
consumers will be a growth market but specific segments within this
market will have different potentials if not fully researched. As an
example, the fastest growth category in 2014 was anti-ageing though
this growth was predominately amongst younger and middle-aged
women.

Japan's Regions
Do you have to open your franchise in Tokyo?
Kansai:
Kansai
The Kansai region in western Japan is the second most important
economic centre and has the second largest population. Kansai
consists of Kyoto, Mie, Osaka, Hyogo,Wakayama, Shiga, Nara, Fukui,
Tokushima and Tottori prefectures. Kansai would rank as the world's
11th largest economy if compared to the world's leading economies.
Kansai's Gross Regional Product (GRP) is $917 billion.
Kansai covers only 12% of Japan's total land area but has a population
of almost 25 million people concentrated in the cities of Osaka, Kobe
and Kyoto. The biggest city is Osaka with a population just shy of 3
million and has an international airport. Consumers in Kansai are very
receptive to new ideas hence the traditional Japanese saying that you
should go to Kansai to see what the rest of Japan will soon be buying.
Successful foreign firms such as Procter & Gamble use the Kansai area
as a test market for launching new products in Japan.
236 foreign-affiliated companies maintained their Japanese
headquarters in the region. Osaka offers benefits to foreign
corporations to set-up in the region, such as the country's first 'zero
local tax' system.

Chain name & LOGO
Voted BEST 5 Asakusa restaurant !
Company Profile
ASAKUSA GRILL BURG is a popular Tokyo steak & burger casual dining restaurant. They offer an
original patty of Odawari and carefully selected cuts of beef. They also sell a variety of iron plate
dishes.
The menu and cooking has been refined with experience so high quality dishes can be produced with
very little training. The restaurant can also be operated as a Café during quiet times with few menu
changes and with their supply of Fair Trade Sri Lanka coffee. They are offering a unique license
agreement costing $650 per month and includes: Intellectual property/Management and software
systems/Remote webcam management system/Know-how and opening support/Training.
Patties and sauce will be supplied by the licensor through their partner trading company. They are
seeking Asia expansion with trustworthy partners.
SALES POINTS
√ Low resource start up
√ Limited food knowledge needed
√ Operational software provided
Full training provided including:
• Hospitality
• Operational
• Software
• Cooking techniques

Japan's Regions
Do you have to open your franchise in Tokyo?
Central Japan
Central Japan:
The Chubu region has the third biggest population in Japan. The area
consists of nine prefectures: Gifu, Shizuoka, Fukui, Ishikawa, Aichi, Mie,
Nagano, Toyama and Yamanashi. The region accounts for 17% of
Japan's GDP, and nearly 70% of Japan's total trade surplus with the
United States. The biggest city is Nagoya with 2.2 million inhabitants
and is Japan's fourth largest city.
The majority of industry is concentrated in the four prefectures of
Aichi, Gifu, Mie, and Shizuoka. The region is the main centre of Japan's
processing industry and approximately 20% of Japan's industrial
production occurs here.
The region's infrastructure has been greatly extended around the
Aichi-Expo site. The Chubu Airport Centrai has daily connections to
Europe and a there is a new logistical hub for DHL. There has also been
a certain trend, discernible for decades, for companies to relocate their
headquarters away from Tokyo back to the Chubu area.

Japan Market
Benefits of opening a franchise in Japan.
҉ 2015 World Nos. 1 Country Brand
҉ The Trend Setter for Asia
҉ 19.74 Million Tourists in 2015
҉ $29.6 Billion Tourist Dollars in 2015
҉ $1.48 Trillion Retail Market
҉ World’s 3rd largest Consumer Market
҉ Largest Urban Area in the World
҉ TPP Trade Agreement
Japan is the gateway into Asia
with a sophisticated trend-setting
market. A well researched,
competitive brand can turn
billions of yen in sales in a few
years. A Japan franchise
consultant can help you
understand the market and the
best entry methods.
Japan is a huge market with one
of the world's largest economies
and biggest, densest populations.
The Japanese consumer is
constantly becoming more
westernised and open to
experiencing new brands and
products, so the Japanese market
remains a rewarding investment
target for overseas companies.
Additional factors:
With Japan joining the TPP this
will greatly reduce the barriers of
entry and encourage a greater
movement of goods and services.
The Government of Japan also
actively promotes inward foreign
direct investment and has
established numerous grants and
tax relief programs for overseas
companies looking to expand into
the Japanese market.
In particular the Japanese market
offers a wide range of lucrative
opportunities to sell products and
services that offer luxury,
convenience, originality, health,
quality and educational benefits.

Japan Culturte
Understanding Japanese business manners.
Gifts
It is common to give gifts in Japan when doing business but not 100%
necessary at the first meeting. Once business appears to be
progressing or about to commence it is then a good time to give a gift.
The quality of the gift is important not the value and the gift should be
packaged to a high standard. It is also a good idea to give a gift that
represents your company or the region you are from and a gift that can
be shared by the receiver. It is deemed impolite to open gifts in front of
the receiver.
Business cards
The giving and receiving of business cards is a very important part of
Japanese business. Try to get your cards printed in Japanese and take a
lot of them. You will give a card to each member in a meeting, starting
with the most senior first. Tilt your head and shoulders and hand over
the card using both hands with the Japanese side face up. When
receiving, also tilt head and shoulders and take the card with both
hands. If you are unsure how low to bow-observe and copy! Place the
card on the table with the most senior member's card on top. Do not
write or bend the card. At the end of the meeting put all of the cards
into a card case.
Decisions
Westerners may find a Japanese meeting circular with no conclusions
or decisions being quickly made-do not panic! this is normal procedure
for a Japanese meeting. The decisions are made by the group who will
often initially agree with the senior's view and then have a series of
follow-up meetings where they will give their own opinions before
reaching a group consensus. This can be a long procedure so please do
not continually harass your contact with follow-up emails or calls as
this will put undue pressure on your contact and will not affect the
speed of the process.

Chain name & LOGO
Patented Technology !
Company Profile
MAY CLEAN specialize in Buddhist altar and the temple cleaning and repair services.
MAY CLEAN’ S experience and know-how has been developed and refined for over 21 years. They
have cultivated specialist skill and have patented technology meaning their service is about one-third
of the cost of conventional methods. The company holds patents for their proprietary cleaning
solutions. (No. 2,033,333, No. 3,437,385). This is the May Clean strength that others can not imitate.
They have contracts to clean the altars, equipment and statutes in 900 temples covering all Japan.
Their honed cleaning methods also mean they are a green company Eco company and clean with the
least amount of water.
SALES POINTS
√ Low cost
√ Standard of cleaning
√ Use of patented cleaning techniques
√ Authentic cleaning method
Full training and support provided including:
• Sales
• Cleaning methods
• General theory
• Specialised Buddhist altar work

Japan Culturte
Understanding Japanese business manners.
Meetings
Always confirm your meeting 2 or 3 hours before and make sure you
are punctual. Wait until you are seated in the meeting room as
Japanese tradition stipulates seating places. English is usually not
spoken during meetings but the company may provide a translator, if
they don't, it is a good idea to invest in a translator though this can be
pricey. Handshaking is acceptable but it is good to give a bow while
shaking. Try not to keep sustained eye contact as this will make people
feel uncomfortable. Small talk is common for the first 10 or so minutes
followed by a formal meeting. A meeting will generally not overrun so
be sure to keep to the agenda. Etiquette and harmony are very
important and the Japanese are anxious to avoid unpleasantness and
confrontation. Saving face is a key concept. so try to avoid saying "No",
instead say "This could be very difficult" or "Maybe", allowing
colleagues to save face.
Dining out
Having dinner with potential partners or clients is a necessary part of
Japanese business. Japanese will fill your glass will alcohol and this is
expected to be reciprocated so don't fill your own glass. Lift the glass
with both hands and hold in the air while it is being filled and when
filling anothers glass, turn the bottle so the label is facing the person. If
your glass is empty it will be automatically refilled by another party
member so if you don't wish to drink more keep your glass at least half
full. If you are offered food please accept and if you don't want to eat
much just take a little and offer to another person. Conversation will be
more relaxed and they may ask you personal questions so please
answer politely. You will find that tentative conclusions and decisions
are more likely to be made during this period compared to the actual
meeting.

Japan Market
Franchise Law.
Intduction
The Japanese franchising law is relatively relaxed compared to
other countries as there is no specific franchise law, the
regulations are encompassed within overall trade and company
laws which makes franchising a relatively straight forward
There is no uniform definition of
franchising in Japan but the
following 2 Acts are the most
relevant laws regarding definition.
1. If a franchise business falls
under the term "chaining
business", it falls under the
Medium and Small Retail
Commerce Promotion Act. A chain
business is defined as business
that, pursuant to an agreement
with uniform terms and
conditions, continuously sells or
acts as an agent for sales of
products and provides guidance
regarding management. In
addition, a ‘specified chain
business’ is defined as-'any chain
business whose agreement
includes clauses which permits its
members to use certain
trademarks, trade names or any
other signs, and collects joining
fees, or deposits any other money
from the member when
becoming a member’.
This law also covers information
required to be disclosed by the
franchisor and therefore some of
the basics underpinning a
franchise agreement such as initial
fees, restrictions on business,
types of products sold,
trademarks, duration/termination
of the agreement and royalty fees.

Japan Market
Franchise Law.
2. Guidelines concerning the
franchise system fall under the Act
on Prohibition of Private
Monopolization and Maintenance
of Fair Trade. This Act states a
franchise system as:
“The franchise system is defined
in many ways. However, the
franchise system is generally
considered to be a form of
business in which the head office
provides the member with the
right to use a specific trademark
and trade name, and provides
coordinated control, guidance,
and supports for the member’s
business and its management.
The head office may provide
support in relation to the selling
of commodities and the provision
of services. In return, the member
pays the head office.”
The running of a small medium
enterprise falls under the SME Act.
Laws regarding Limited liability
partnerships fall under the
Limited Liability Partnership Act.
Foreign investment is regulated
by the Foreign Exchange and
Foreign Trade Act.
Foreign Exchange and Foreign
Trade Act.
Franchisors can register
trademarks to protect such marks
from infringing use under5 the
Unfair Competition Prevention
Act.
Leased property disputes with
franchisees or landlords is covered
in the Land and Building Leases
Act.

Chain name & LOGO
Over 100 stores in Japan !
Company Profile
Foodnavi focuses on attractive ingredients which when harnessed maximize the taste of food. They
utilize the buying power of their chain to purchase quality ingredients at a preferential cost.
Their brand HAMAYAKI TARO delivers a unique cooking experience in a lively, entertaining restaurant.
Food trends have limited effect on their performance and their brand that will prosper in any climate.
The customers cook the food themselves bbq style so food inexperienced franchisees can thrive, staff
costs are 75% lower than other restaurants and initial set up costs are reduced. With over 100 stores
in Japan they are a well-established franchise.
They offer flexibility in their franchise system allowing franchisees input into their franchisee and
adaption to local markets. They will also introduce real estate through their partner network.
SALES POINTS
√ Expected ROI after 2 years
√ Efficient management and operations
√ Low experience needed and ease of operations
Full training and support provided including:
• Help with product development
• Management training
• Menu and PR materials
• Extensive business models analysis
√ Significant franchisor support and know-how

Franchisemeets.com
Think Life. Think Franchise.
info@franchisemeets.com https://franchisemeets.com
FOCUS:
Japan
April 2016