Taking U.S. Franchises Global

Keeping ahead of the wars, economic meltdowns, and political disasters

One of our jobs for our U.S. clients is to look two to three years ahead, figure out where wars will raging, where economic meltdowns will be occurring, and where political disasters are looming – then take our clients elsewhere!
The key to successful international business is constant monitoring of the economies around the world and being ready to move quickly to higher potential and calmer countries.

Why do we need to do all this? Our company exports U.S. franchise brands.

We act as an outsourced international development department for brands such as Build-A- Bear Workshop®, Denny’s®, International Dairy Queen, Lawry’s® The Prime Rib, Massage Heights®, Everlast Fitness® and Mosquito Squad®. One of our primary tasks is helping the brands prioritize the countries they enter, focusing on countries that have the highest ROI potential for the specific brand.

Recently, the CEO of one of the brands we work with told me that our job was to look two to three years ahead, figure out where the wars will be and take them elsewhere.

It turns out this is just a little bit funny – while at the same time being quite serious.

I would restate this to looking two to three years ahead not only to determine the potential for war, but also the potential for economic meltdowns and political disasters.

This is important due to the fact that it can take two to three years to find and sign a country licensee, and then another one to two years to get the first unit of the franchise open in a country.

How do we do this? Research, research and more research.

We subscribe to 25 international business data and analysis sources. We have team members on the ground in 32 countries. And our US-based executive team collectively has 120 years of international experience living and working in over 69 countries. We have a full time Director of Research who monitors our sources and watches for trends.

That being said, there are still ‘exciting’ events that change the potential for finding investors in a target country that are ready and willing to make the new investment required to acquire the license of one of our U.S. franchise brands.

Two examples are the recent United Kingdom Brexit vote and the disintegration of Turkey as a place to do business.

No one really thought about what the consequences of actually voting to leave the European Union would be. Now we are beginning to see consequences – and all is not good. Where were the adults when this was happening?

I lived in Turkey in the mid 1980s and it was a great place to reside and to work. It was the world’s only secular, Muslim democracy. Turkey had a female Supreme Court judge before the USA, and a female Prime Minister in the 1990s. Over the past 10 years, things have gradually changed, and now Turkey is no longer secular and it is not really a democracy. The Ottoman Sultan seems to have returned after 100 years. The rapid GDP growth rate is being replaced with the rapid growth of inflation. In recent weeks, inward investment has stopped, and Turkish business people are not making any new investments. Our company has closed our office in Istanbul.

On the other side of the coin is Argentina. For several decades this country has been run by poor governments that defaulted on international loans and paid foreign franchisors their royalties in soy beans. Early in 2016 a new and radically different government came into power. In a matter of a few months they settled the long standing debt problem and made the local currency float free against the dollar. New inward investment is staggering as this first world country with a highly educated population is starved for new products, services and brands. We have started marketing U.S. franchise brands in Argentina for the first time since the mid 1990s. As a local business person told me, “The U.S. dollars have come out of the Argentinean mattresses for the first time in decades.”

At the end of the day we have learned that constant research is key to looking ahead. We have also learned that there will always be surprises. The key to successful international business is constant monitoring of the economies around the world and being ready to move quickly to higher potential and calmer countries.

EGS publishes research projects related to global business development, most notably the GlobalVue™ franchise country ranking, which has been published quarterly since 2001. The latest version of this country ranking tool can be downloaded at the following link: EGS-Dual-GlobalVue-0716.pdf

William Edwards, CEO of Edwards Global Services, Inc., has 40 years of international business experience. He has lived in 7 countries, worked on projects in more than 60, and has advised more than 50 U.S. companies on international development. Contact him at +1 949 375 1896, bedwards@edwardsglobal.com, or read his blog at Geowizard.biz

A version of this blog first appeared In the Fall 2016 edition of the International Executive Resources Group (IERG) Fall 2016 ‘IERG Connect’ newsletter.


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 Business

Our GlobalTeam™ of highly experienced international project managers – on the ground in 32 countries – contributed to the following brief summary of the franchise world opportunities for 4th quarter 2015.

Asia China
Japan
Malaysia
Mongolia
The Philippines
Thailand
Viet Nam
Watch the consumer economy not the overall GDP growth.
Large corporations are investing in new consumer projects.
Ringgit drop of 25% against the US$ plus political unrest.
US pizza and coffee franchises flourishing. Seriously.
Middle class buying power accelerating.
Stable politics. Military dictatorships often are stable.
US sailors on shore leave, 6%+ GDP growth.
Americas Argentina
Brazil
Canada
Chile
Colombia
Mexico
Peru
USA
You still get paid in soybeans, if at all.
Economy is stalled, inflation climbing, corruption rife.
Tim Horton’s and Burger King are now one???
New President negative on business. Investment stopped.
Show me the money and where it came from.
Mexico City, Monterrey and Cancun booming.
Lima is a city of cranes and new foreign F&B brands.
US$15/hour minimum wage means no margins, less jobs.
Europe Ireland
Germany
Poland
Russia
Spain
Turkey
United Kingdom
GDP growth of 3.5% projected for 2016.
Difficult to find investors/risk takers for new foreign brands.
3.5% GDP growth for 2015 is the highest in the EU.
Foreign brands with US$ denominated rents are closed
GDP growth for 2016 estimated to be 2.6%.
Political unrest leading to drop in new project investment.
2.4% GDP growth, but normal investment analysis paralysis.
Middle East Egypt
Saudi Arabia
Dubai
Pent up consumer demand, high growth but scary 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 2.6% but falling commodity exports. Jobs iffy?
Not another country, another universe.
Low growth, high unemployment (25%), low new investment

 


The Fastest 2 Minutes in International Business

For 2015, EGS’ U.S. clients are seeking licensees in over 20 countries. Our GlobalTeam™ of highly experienced international project managers on the ground in 35 countries contributed to the following brief summary of the world mid-2015:

 

Asia China
Japan
Malaysia
Mongolia
The Philippines
Thailand
Viet Nam
Citizens: you didn’t really lose money in the Shanghai market.
Large corporations are investing in new consumer projects.
Prime Minister didn’t really put US$1B in his bank account.
U.S. pizza and coffee franchises flourishing. Seriously.
Subic Bay is operating again, U.S. Embassy doubling in size.
Stable politics. Military dictatorships often are stable.
U.S. sailors on shore leave, 6%+ GDP growth.
Americas Argentina
Brazil
Canada
Chile
Colombia
Mexico
Peru
USA
You still get paid in soybeans, if at all.
Economy is stalled, inflation climbing, corruption rife.
Tim Horton’s and Burger King are now one???
New President negative on business. Investment stopped.
Still ‘show me the money and where it came from.’
Mexico City, Monterrey and Cancun booming.
Lima is a city of cranes and new foreign F&B brands.
US$15/hour minimum wage means no margins, less jobs.
Europe Ireland
Germany
Poland
Russia
Spain
Turkey
United Kingdom
GDP growth of 3% in 2015, high for the EU.
Difficult to find investors/risk takers for new foreign brands.
3.4% GDP growth for 2015 is the highest in the EU.
Foreign brands with US$ denominated rents are closed
GDP growth for 2015 of 2.9%. Major 2016 comeback.
Finally realized they should shoot at ISIS.
2.4% GDP growth, but normal investment analysis paralysis.
Middle East Egypt
Saudi Arabia
UAE
Pent-up consumer demand, scary security and future.
Challenges to get new businesses open due to regulations.
New building push, large expat influx, airport & airline soaring.
Elsewhere Australia
India
South Africa
Economy soaring but tied to commodity exports. Jobs iffy?
Not another country, another universe.
Low growth, high unemployment (26%), low new investment

Updated: July 27, 2015


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