Global Business Development

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

  • Master Franchise – Franchisor grants exclusive rights for a country to one company or expert, often with the right to sub-franchise 
  • Area or Regional Franchise – Franchisor grants exclusive rights for part of a country. The most common method for food franchises
  • Direct Franchise – Franchisor awards expert or certified franchisees and directly supports their Franchisees in a country
  • Joint Venture License – Franchisor jointly invests, owns, and develops the business in a country with a local company
  • Direct Investment – Franchisor owns and operates all units in a country. 

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

 


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