Blog Hotspot for Franchise News ...

Global franchise expansion is a natural evolution for businesses proven popular in their original markets. The International Franchise Association (IFA) cites three major regions as the best places for franchise international development: North America (Canada and Mexico), Western Europe and Latin America.

Although buying and starting a franchise in the US can be complex, the uniformity of laws, customs and language make it easier than launching a franchise in a foreign country. For one thing, laws vary from country to country on small business operation and franchise licensing.

Here a just a few differences in franchise law in different countries:
* The disclosure acknowledgment and “cooling off” periods are longer in Australia than the US.
* Brazil requires the Franchise Agreement be translated into Portuguese and registered with the Brazilian Patent and Trade Office.
* There are special stipulations about terminating the Franchise Agreement in Mexico.
* Spain imposes special registration laws applicable to franchises.

The IFA has a detailed guide to franchise laws in various countries at its web site: http://www.franchise.org

Franchisors looking to expand into international markets typically start with Master or Area Developer License arrangements. A Master License allows an individual to sell franchisee rights within a fixed territory, such as an entire country. The Master Licensee in effect becomes the franchisor for that country and sells franchise licenses, for which the Master Licensee receives a portion of the fees. An Area Developer actually runs franchise units rather than sells licenses in an assigned territory; and must have substantial resources to invest, backed by business experience.

One new and increasingly used practice in international franchise development are “test periods” of one or two years, during which the franchisee operates as an Area Developer and must meet minimum unit openings and operation before advancing to a Master license.

Because there are diverse cultural, language and legal issues to address for international franchise development, franchisors look for certain qualifications in prospective franchisee candidates. Obviously, speaking the language is important. Individuals who already own or lease a potentially good location are also more likely to be awarded a franchise license. US Embassies in foreign countries have a commercial service that provides information to native residents about local business opportunities through American-owned companies.

There are many business consulting firms that specialize in helping prospective franchisees find the right international opportunity. These consultants can help the franchise understand and navigate through the legal requirements and local customs. You can find consultants for individual countries as well as larger international markets at this web page:
Business Consultants

Check out international franchise opportunities at these upcoming expositions:
September 28-29: Shanghai International Franchise Exposition
October 8-9: 6th Annual Polish Franchise Exposition, Warsaw
October 2-3: Franchise Association of India Convention & Expo, Mumbai
October 10-17: IFA International Trade Mission to Australia: Melbourne and Sydney
October 23-26: 13th Macao International Trade and Investment Fair
October 23-24: Caribbean American Franchise Forum, Santo Domingo, DR
November 5-6: International Symposium on Franchising, Los Angeles

Franchising has taken root around the world with many franchises of all types now operating across the globe. Many popular American franchises – MacDonalds, Pizza Hut, KFC, and Subway – now have numerous stores in international locations.

The future looks bright for franchise owners, and prospective master license holders looking to establish new international franchise territories. Consider these facts about international franchise growth:

• In Australia, franchise business are an ever expanding part of the small business sector, and now represent 14 percent of Australia’s national Gross Domestic Product. About 600,000 Australians are employed in franchise businesses.

• Franchising has grown especially strong in Brazil over the past decade. According to the Brazilian Franchise Association, franchise businesses have been increasing at a sustained rate – one that is higher than the average Brazilian Gross Domestic Product index.

• Canada is second only to the US in franchise growth, with Canadian franchises achieving more than $100 billion in sales. There are about 76,000 individual franchise operations in Canada, operating under 900 different brand names. Analysts estimate that there is one franchise operating for every 450 Canadians.

• The UK has also experienced tremendous growth in franchise businesses. In 2006, the franchise industry grew twice as fast as the overall economy. Franchising increased by 44 percent over the past decade in the UK, and accounts for about ₤10.8 billion annually in sales.

• India now has many well-known franchises, including Pizza Hut, Dominos, KFC, McDonald’s, Gold’s Gym, Kodak, Subway, Holiday Inn and others. The Indian franchise market has achieved steady growth of 30 to 35 % per annum during the first decade of the 21st century. The annual revenues generated by franchise businesses in India exceed $3.3 billion US.

• Saudi Arabia has seen many American franchises take hold, with fast food franchises accounting for more than 60 percent of the total franchise market. American firms dominate the franchising landscaping and account for more than 70 percent of all franchised operations in Saudi Arabia. American franchise products and services, including fast food, hotels, car leasing, laundry services and printing, are in demand. With 44.4 percent of the Saudi population is under the age of 15, brands such as McDonald’s, Hardee’s, Burger King, Popeye’s, Chili’s, Pizza Hut, Saks Fifth Avenue, Limited Too, Mail Boxes, Anne Klein and more are expected to keep growing in popularity.

• South Africa has an estimated 400 franchise systems, with 23, 000 franchise outlets employing 300,000 people. The annual rate of growth for franchising is about 13 percent.

• China is experiencing tremendous growth and potential for franchise expansion. The low cost of labor coupled with the huge and growing consumer market makes the People’s Republic of China especially attractive for investments by foreign companies. In 2001, China joined the World Trade Organization, and in 2004, the country liberalized regulations on foreign investments in China. KFC was the first American franchise to open in China, and many other popular brands now operate there.

Pizza in Kuwait… Gap jeans in the Phillipines Gourmet Burgers in Turkey-these are just a few examples of how international franchising is growing at a tremendous rate. US-based Pizza Inn is expanding into the Middle East and Asia. The Gap is opening eight stores along with four Banana Republics in the Philippines. Carrefour, a popular French food retailer, is launching operations in Poland. And the UK-based Gourmet Burger Kitchen will soon be selling its tasty wares in Turkey. (more…)