Everything You Need To Know To Make Your Franchise A Global Success

“96 percent of the world’s consumers and over three-quarters of the world’s purchasing power are outside of the United States”, US SBA Administrator.

“Nearly 90% of the next one billion people to attain middle-class status will be in Asia.” Homi Kharas, Brookings Institution.

“As Globalization has taken hold over the last 20 years, international growth has become a “must” for any company seeking high rates of sustained future growth.” Catherine Monson, CEO, FASTSIGNS and Chair, International Franchise Association.

Running a successful and profitable franchise is a good way to accumulate wealth and become a high net worth businessperson and entrepreneur. However, you will need to be well educated, and maybe even a certified franchise expert, if you want to see your franchise make a lot of money.

A recent survey of Franchisor members of the International Franchise Association indicated more than 80% were either international or planned to go global this decade. Having helped 40+ franchisors take their brand global, here are the questions most people have:

• Which countries have the highest potential for our specific brand?
• What is the best international development model for our specific franchise?
• Will our brand fit into the culture of other countries?
• Will we have to change our training, support, and marketing programs?
• Can we eventually make a good return on our international investment?
• What does it cost to develop our franchise outside our home country?

To answers these questions, let’s answer the why, when, how, where and with whom of taking a franchise international

Why Take Your Franchise International?

• Add new sources of franchise fees, royalties and product sales
• Reduce dependence on your home country market
• Leverage your existing technology, know-how and intellectual property
• Improved economies of scale through network growth
• Become a franchise expert

When should you take your franchise international?

• 10 units or 250 units? The number of units is not the best measure of being ready
• When your business management technology and Intranet are robust
• When you have applied for a trademark before seeking a licensee in a country
• When your training, marketing, and support resources are online
• when you’ve become familiar to franchising and an expert in the domain
• But, most of all, when you have a plan to succeed

How – The International Development Options

Where should you take your franchise?

• Rule of Law and IP Protection – this is needed to protect your brand over time
• Country Stability – this is needed to be able to start and grow your brand
• Your consumer market size – who can. And will want to buy at your franchise
• Culture – adaptation, but not changing the brand
• Ability to get paid in a timely manner, not all countries allow freedom of payments
• Potential to Achieve An Acceptable ROI – you will have costs associated with fees

And with whom? Your international licensee should have these attributes:

• A passion for and understanding of your business
• Successful company with expert experience in appropriate sectors
• Good reputation in the country
• Experienced management to put into the business
• Access to suitable real estate
• Marketing oriented company
• Capital to start and grow your business in their country
• Preferably a licensed or certified expert themselves

A Proven International Development Strategy

• Budget conservatively for the first 3-5 years of international developments
• Be realistic in your initial fee expectations
• Realize that initial fee revenues have associated expenses over time
• Be realistic in how many countries you can award and properly support
• Plan ahead for marketing, training, and support costs

William Edwards, CFE, is CEO of Edwards Global Services (EGS) and a global advisor to CEOs. He has 47 years of expert international experience and has lived in 7 countries. He has been a certified Franchisor, an International Master Franchisee in 5 countries, and has assisted more than 40 franchisors in their global development.  bedwards@edwardsglobal.com  +1-949-224-3896.  For more information on the Certified Franchise Executive program, please go to this link: http://bit.ly/3ulCfpE

The Fastest 2 Minutes in International Franchising

Our GlobalTeam™ of highly experienced international specialists in the USA and on the ground in 32 countries contributed to this summary of today’s world business opportunities. Countries to watch for excellent business development opportunities in 2017: the Philippines, the UAE, Spain and Poland.

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Asia	China Japan Malaysia The Philippines Thailand Viet Nam	Consumer economy growing at over 8% per year Corporations are seeking consumer investments Political and currency unrest Many new US international businesses opening Starting a comeback from post-coup recession 6%+ GDP growth, USA franchises desired
Americas	Argentina Brazil Canada Chile Colombia Mexico Peru USA	Dramatic change, new government, improving economy Economy, stalled, inflation up, government problems New tax-focused government Government regulations increased Uneven growth, low new investment Post US election new investment stoppage New pro-business government, US brand friendly Renewed business confidence: lower taxes, regulations
Europe	Ireland Germany Poland Russia Spain Turkey United Kingdom	Good GDP growth, slow to see new investment Difficult to find investors for foreign brands Highest EU GDP growth Not now!!! Recovery speeding up, heavy new investment Political unrest and terrorism = no new investment BREXIT & election fallout slowing new investment
Middle East	Egypt Saudi Arabia United Arab Emirates	Security and hard currency problems Difficult to get new businesses open once built New US brands entering, strong new investment
Elsewhere	Australia India New Zealand South Africa	Challenge to find investors for foreign brands Challenge to find licensees who follow system Few consumers, but pro foreign brands High unemployment (25%), low new investment

 

The Fastest 2 Minutes in International Franchising

Our GlobalTeam™ of highly experienced international specialists on the ground in 32 countries contributed to the following brief summary of the franchise world opportunities for 1st quarter 2016. Countries to watch for franchise opportunities in 2016: Argentina, the Philippines, the UAE, Spain, Poland and Peru.

Asia	China Japan Malaysia The Philippines Thailand Viet Nam	Consumer economy growing at 8.2% per year Only large corporations are investing in new projects Political unrest, declining Foreign Direct Investment Many new US F&B brands opening 4% GDP growth expected in 2016 6.5% GDP growth, prefer US franchise brands
Americas	Argentina Brazil Canada Chile Colombia Mexico Peru USA	Dramatic change, new positive government Economy is stalled, inflation climbing, political uncertainty Declining investment in F&B, tax focused new government 3.7% GDP growth for 2016. Government regulations? Show me the money and where it came from Mexico City, Monterrey and Cancun booming Lima is a city of cranes and new foreign franchises US$15/hour minimum wage kills margins. Election year
Europe	Ireland Germany Poland Russia Spain Turkey United Kingdom	GDP growth of 3.5% projected for 2016 Difficult to find investors/risk takers for new foreign brands 3%+ GDP growth for 2016. Slow new franchise investment Not now 2.7% GDP growth for 2016. Recovery speeding up Political unrest leading to drop in new project investment 2.2% GDP growth, but normal investment analysis paralysis
Middle East	Egypt Saudi Arabia Dubai	Pent-up consumer demand, high growth, iffy security Challenges to get new businesses open due to regulations New building push, large expat influx, airport & airline soaring
Elsewhere	Australia India South Africa	GDP growth of 2.5% but falling commodity exports. Jobs iffy? Not another country, another universe. But opportunities. Low growth, high unemployment (25%), low new investment

 

The Fastest 2 Minutes in International Franchising

For 2015 EGS’ US franchisor clients are seeking licensees in over 20 countries. Our GlobalTeam™ of highly experienced international development project managers contributed to the following brief summary of the franchising environment around the world for the New Year:

 

Asia	China Japan Malaysia Mongolia The Philippines Thailand Viet Nam	F&B franchises iffy, as is the investment climate Carl’s Jr. signed a 150 restaurant license New mall developers are seeking US franchises Pizza and coffee franchises – now 2 each! A focus on more US F&B brands Overall stable politics, but economy is iffy F&B franchises desired
Americas	Argentina Brazil Canada Chile Colombia Mexico Peru USA	You still get paid in soybeans Economy is stalled, new investment stopped for now Tim Horton’s and Burger King are now one (???) New President seems negative on business Still ‘show me the money and where it came from’ Mexico City, Monterrey and Cancun booming A focus on more US F&B brands Franchise model with individual owners remains in peril
Europe	Czech Republic Ireland Germany Poland Russia Spain Turkey United Kingdom	Prague has a high GDP/capita, other large cities lower GDP growth of 3% in 2015 is high for the EU Difficult to find investors for new foreign brands 3.3% GDP growth for 2015 is the highest in the EU Foreign F&B brands have US$ denominated rents GDP growth for 2015 of 1.7% is high for large EU countries US F&B investment and high-end malls growing Build a pilot first, then investors come
Middle East Egypt	Saudi Arabia UAE	Interest in new franchise unit investment for 2015 Challenges to get new businesses open due to regulations New trend of neighborhood malls in Dubai
Elsewhere	Australia India New Zealand Nigeria Pakistan South Africa	90%+ local franchises, difficult to get foreign brand investors New government equals a very positive business attitude Few consumers, but pro foreign franchise brands Foreign franchises have numerous operating challenges Not now for foreign brands 90%+ local franchises, but hope for foreign brands

 

The Fastest 2 Minutes in International Franchising

In 2014, EGS’ US franchisor clients are very busy finding licensees in over 25 countries. Our GlobalTeam™ of highly experienced international development project managers contributed to the following brief summary of the franchising environment around the world.

Asia	China	Food quality stinks; new F&B franchises shrink
	Japan	New, large scale US F&B investment
	Malaysia	Government barriers for foreign franchises
	The Philippines	New professional companies seeking US brands
	Thailand	What coup? New franchise investment by major groups
	Viet Nam	Just bring coffee brands
Americas	Argentina	You get paid in soybeans
	Brazil	95% local franchisors, government barriers to entry
	Canada	True regional development beginning
	Chile	Perfect market, except for the lack of people
	Colombia	Show me the money and where it came from
	Mexico	Selected areas booming
	Peru	GDP/capita growth and resulting investment wonderful
	USA	Franchise model in the birthplace of franchising in peril
Europe	Czech Republic	Small market, but a perfect European brand showplace
	Ireland	Investors not quite back to investing
	Germany	English not spoken and ‘We already have it’
	Poland	Good franchise growth outside Warsaw
	Russia	Really? Now?
	Spain	Fast recovery, many investors seeking brands
	Turkey	US F&B booming, despite tin pot ruler
	United Kingdom	Analysis paralysis. Build a pilot first, then investors
Middle East	Egypt	Next year, really…
	Saudi Arabia	New F&B brands entering. Permits to open units???
	UAE	Abu Dhabi and ‘More fast food, please’
Others	Australia	90%+ local, locals like local brands
	India	Separate universe
	New Zealand	The opposite of Australia, but few consumers
	Nigeria	Really???
	Pakistan	Not Karachi
	South Africa	90%+ local franchises to date, but a change is coming