In February, Famous Brands will launch an outlet of Paul, the French chain of bakery-cafes, in Melrose Arch in Johannesburg, marking the group's first tie-up with a global brand since 2001. The association with Paul, outlets of which will be owned by the company and not franchised, aligns with the group's strategy to build its portfolio of premium brands catering to the upper end of the market, following its success with tashas, Mythos, Vovo Telo and Turn 'n Tender.The niche upmarket brands have not yet had a material effect on Famous Brands' revenue and, for now at least, its guerrilla marketing brands - Steers, Wimpy, Debonairs Pizza, Fishaways and Mugg & Bean - remain the mainstay of the group.However, CEO Darren Hele said recently: "These smaller acquisitions don't really move the needle initially, but when you're talking about a brand like tashas it starts to move the needle over time."Other brands "which aren't moving the needle yet" provide exposure - "that's partly why we've grown in confidence in the evening dining category", he said.story_article_left1"In our world it's a bit like research and development - you start to understand why a consumer is migrating in a certain direction and behaving in a certain way."The group has signed a 10-year licence agreement with Paul and plans to roll out the brand slowly, opening five restaurants over five years.Paul serves more than five million customers a month through 400 bakeries in 41 countries in Europe, the Middle East, Asia and the US. In Africa there are outlets in Ivory Coast, Morocco and Reunion.The deal with Paul marks the first time since 2001 - when it failed to successfully introduce Church's Chicken into South Africa - that Famous Brands has linked up with a foreign brand.Unlike competitor Taste Holdings, which has introduced Dominos Pizza and Starbucks into South Africa, Famous Brands' strategy has been to expand its local brands, for which no licence fees are paid to an overseas operator.However, Paul offers the chance to capture more spend from higher-income consumers and the possibility of introducing the brand elsewhere.Maxime Holder, president of Paul International, said recently that Famous Brands could in the longer term provide Paul with access to other African countries where the French chain is not yet represented.But for now, further expansion by Famous Brands into Africa will be driven by Debonairs Pizza, which already has 93 restaurants outside South Africa in 14 African countries, and supported by Mugg & Bean and Steers.There are plans to open tashas outlets in London and Sydney, although the immediate focus remains on South Africa and the Middle East. There has also been interest in the Mugg & Bean brand from countries outside Africa.Jean Pierre Verster, a portfolio manager at Fairtree Capital, said there was a strategic imperative for offshore exposure for Famous Brands, especially a footprint in the UK."I wouldn't be surprised if a lot of [group strategic adviser] KevinHedderwick's strategic time is spent looking offshore. With Darren's operational focus and Kevin's strategic focus it's the best of both worlds. It's more of the same - but same is good, very good."mini_story_image_hright1Verster said the "premiumisation" of the Famous Brands stable was vital, and similar to what had happened at SABMiller, where Hedderwick once worked."They generate good margins with mainstream brands, but they can lift margins even further with premium brands. The same is happening with food. People are willing to pay more for better ambience, quality and service."Famous Brands has developed a portfolio which includes brands that can demand a premium - and the associated higher margins benefit franchisee and franchisor," said Verster.The group's franchise brands are underpinned by manufacturing and logistics operations, which contribute about 40% of total operating profit.Opportunities to build capacity at the back end of the business continue to be explored. Recently the group bought French fries business Lamberts Bay Foods and Cape Concentrate, a tomato processing plant. Both ensure supply of essential menu items for the group's franchise network and have the potential to supply the food service and retail industry.Hedderwick said the group was reluctant to head overseas with local brands (apart from tashas), although it would consider buying an existing entity in the UK to derive hard currency earnings.Few companies have made the transition from a family business to a successfully listed entity as well as Famous Brands has under Hedderwick."Famous Brands was never a job for me. It was never simply a career. This has been my life for 16 years. I'm emotionally attached to this business. I'm passionate about it, so even if my contract specifies 10 days a month at the office from March until February next year, if I end up coming here more than 10 days a month it's not because it's a grind - I just love the business. But obviously I don't want to get in Darren's way either," he said.Hedderwick, who has worked with his successor for 13 years, talks highly of Hele's leadership and operational skills."Identifying Darren as the logical successor has been on the cards for two or three years.story_article_left2"Once I started to think 'Is this time for me to hand over the baton?', the logical question was 'Who's the successor?'"It wasn't a difficult decision. We know each other; we know each other's styles, characters and abilities."Hele joined Famous Brands when the group bought Pleasure Foods in 2003. At the time, he was the MD of Wimpy. The group also bought Wimpy in the UK soon after, and Hele worked overseas for two years to turn the business around and integrate it into the group.The strategy now for Famous Brands is to expand into the broader leisure and consumer product space, incorporating the retail and hospitality sectors.Compared to global consumption of fast food, "the industry is still in its infancy here, but it's economy dependent and we have to look further afield than our immediate area of operation", said Hedderwick.The business is highly cash generative, has a strong balance sheet and no debt. It continues to gain market share, but not because pressure on consumers is easing. Rather, the group is growing its reach and traction in the marketplace, with growth as strong in outlying and rural areas - and smaller towns - as it is in the biggest cities.So where does Hele see the business in five years? "Hopefully there will be some dollarised earnings, or a substantial income stream from the UK, and in the interim, we will be pushing hard to achieve our ambition to expand into the retail and leisure space locally."..