Taking U.S. Franchises Global

A Global Franchising Update for Selected Countries

Our company, Edwards Global Services, Inc., is honored to work with some of the very best U.S. franchisors to take them global.

We closely monitor consumer spending in over 50 countries as consumers are the target market for the U.S. franchise brands we represent. Often media reports look at a country’s economy from the macro or 30,000 foot perspective. We look at a country’s economic activity from about 50 feet: what is the consumer doing and are they spending?

Here are a few updates on our clients’ recent and planned international openings, plus, an update on a ‘new’ or ‘reawakened’ market: Argentina.

Argentina – For decades, this European-style country has experienced political and economic challenges. After only a few months in power, Argentina’s new government has already taken significant steps to address the country’s economic problems. Argentine President Mauricio Macri has removed export taxes for agricultural products, slowed the printing of pesos, abolished most currency controls, and taken steps to remove subsidies on electricity, food and natural gas.

He has removed export tariffs on beef, soybeans, wheat, and corn, giving exporters greater leeway to sell their products abroad. Macri also plans to eliminate subsidies on electricity, food, and natural gas, thereby reversing the inefficiencies that have burdened Argentina’s economy in previous years. (“Argentina’s New President Lays the Groundwork for a Better Economy”, Stratfor, January 19, 2016)

Argentina was a strong franchise market in the past, and we are beginning to see interest by U.S. franchisors in re-entering this large, well educated, and sophisticated market in Latin America.

Italy – While Italy is considered a slow growing market in the European Union, with significant economic challenges, there are opportunities for new consumer brands in certain sectors. Burgers are one of those sectors. Just over a year ago, Fuddruckers® burger brand opened its first European location in Milan, Italy. Today there are two locations in Milan and a new location in Warsaw, Poland. Europe loves Fuddruckers’ burgers and wings!

Near Milan

Near Milan, Italy

Japan – This is generally considered a slow growth country that has been slow for several decades. That is not true in the consumer sector, and certainly not in the burger sector, where several U.S. brands have entered recently to challenge McDonald’s 3,000 unit monopoly. Carl’s Jr.® recently announced the opening of its first restaurant in Tokyo. In this photo, Ned Lyerle, President of CKE Restaurants International, is on the right, along with our company’s Japan Associate, Ichiro (Roy) Fujita.

Carl’s Jr.®

Carl’s Jr.®

Philippines – In December 2015 it was announced that Denny’s® has signed a license agreement with the Bistro Group, who also is the Philippines licensee for TGI Friday’s® and Buffalo Wild Wings®. The first Denny’s® restaurant in the Philippines will open in Manila in mid-2016. The Philippine economy is expected to grow at 6.5% in 2016. U.S. food franchise brands are greatly desired.

Denny’s®

Poland – This is the one country in Europe where GDP growth did not turn negative between 2008-2012. This year the country’s economy is expected to grow at 3.1%, the highest in the European Union. This is driven almost entirely by consumer spending.

International Dairy Queen entered Europe last year. This 75-year old brand, with 6,500 stores in 28 countries, now has three stores in Warsaw. Yes, the iconic Blizzard® is present in Poland and selling well, even in the winter!

International Dairy Queen

International Dairy Queen

Turkey – Two years ago, Build-A-Bear Workshop®, the world’s largest children’s entertainment retail brand, opened its first store in Istanbul. Today there are three stores in Istanbul and one in Ankara. Turkish families love to spend money on their kids and Build-A-Bear Workshop® helps!

Build-A-Bear Workshop®

Build-A-Bear Workshop®

United Arab Emirates – The UAE continues to see annual Gross Domestic Product (GDP) growth in excess of 3% per year. Dubai is the center of tourism and financial business in the region. New U.S. food brands are continuing to enter this lucrative market.

In December 2015, Denny’s® opened its first restaurants in the Middle East in Dubai. In this picture are John Miller, the CEO of Denny’s®, and Steve Dunn, The Denny’s® Global Chief Development Officer.

Denny’s®

Denny’s®

Vietnam – With a GDP annual growth rate of over 6% and a very fast growing middle class consumer market, Vietnam is one of the top developing markets in Asia. U.S. franchise brands are highly desired. Recently our company finalized the country license for PJ’s Coffee of New Orleans® to open 10 or more high end coffee shops in Vietnam over the next 5-7 years. Vietnamese are very big coffee drinkers and love the social aspects of meeting for coffee and pastries with their friends.

PJ’s Coffee of New Orleans


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

 


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