Export News 29th November 1999
Auckland technology company Beyond Imagination is franchising its digital photo manipulation system in Britain.
The company launched its easy-to-use system for enhancing and reprinting photos in New Zealand in 1992; at the beginning of this year, company directors Ken Holmes and lan Handricks decided to expand its operations offshore, starting in the United Kingdom.
Besides the size of the market, and its concentration into cities and towns, the UK was targeted because research showed that the company would face little or no real competition there and a good network of support engineers and trainers were available. Furthermore, specialised computer finance organisations exist there who could fund potential purchasers.
Swallowlield, near Reading in Berkshire, was chosen as a base because of its population density, buoyant economy and proximity to transport systems; and the company was up and running 48 hours after arrival.
It quickly became apparent that the Photocraft product sold in New Zealand would need to be franchised to best capitalise on the market. People inquiring about the system seemed to be much more interested in the product if it was fully franchised as franchised products require commitment from the seller as well as the buyer, Beyond lrnagination director Ken Holmes says. "Franchises give the buyer confidence that there is a mutual path toward success."
A British franchising expert advised the company that substantial manuals and support material would be required and suggested that Beyond Imagination contact one of his associates who specialised in manuals.
After this expert costed the job at more than NZ$6000 and said it would take about three months to complete a draft, the company decided to have a go themselves. The manuals were completed in less than a month and supporting documentation, including a prospectus, financial models, product guides and marketing support material were completed by the end of June.
An attempt to register the trademark Photocraft, was stymied at the last minute by a company about to launch a magazine by the same name, so the company opted instead to register a new name, Photopages.
A leading franchise lawyer was contracted to prepare a franchise agreement. The agreement is used as a template for new contracts, shortening the pre-sales cycle with potential franchisees and the finance companies providing lease funding.
Initially the company duplicated the New Zealand model by advertising for prospects in the "business opportunities" section of major daily newspapers. The initial advertising round attracted more than 100 respondents and gave the company a chance to gauge the market.
Being a New Zealand company starting fresh in an established market was no disadvantage, Holmes says. "As a country we are well respected in the UK and the prospects were pleasantly surprised to see a technology company from New Zealand having such an exciting product."
Having New Zealand’s senior trade commissioner in the UK, John Waugh, visit helped position the new venture solidly in the community, Holmes says. "We received excellent press coverage of both the visit and the development of the company in local newspapers.”
Revised advertising in The Times has brought good leads; a customer relationship management database has been established which is being used to gauge the effectiveness of the revised advertising campaign.
"Our decision to market Photopages in the UK was not taken lightly," Handricks says. "We clearly saw the need to develop our business without adversely affecting the existing network of Photocraft users in New Zealand. Adding too many more systems into New Zealand would only force a dilution of revenue for existing users."
Holmes and Handricks are particularly proud that Beyond Imagination is one of the few New Zealand companies to export technology hardware and one of the few to export a locally developed franchise.