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International Franchising – Global Growth Continues

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.
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