2009 has been a big year for international franchising. If anything, it’s a sign that the world is getting smaller by the day. But it doesn’t mean that relocating your franchise to a new country will lead to overnight success. As franchises reach more and more exotic locales, you’ll have to bring a brand new culture around to a new way of doing business.
Food franchises have been the most bullish about international expansion, but in many ways, they face the greatest challenges in cracking the developing world. There might be billions of people living in India and China, but beyond the novelty value, how interested are locals in eating fried chicken or double-cheeseburgers on a regular basis? Not only do these cultures have their national foods but they have their own eating habits. Food franchises must lay the ground for a new alternative.
It is no coincidence that the rise of franchising in America coincided directly with the rise of the American middle class. Franchising is perfectly suited to the needs of middle class life. We now see America’s biggest franchises trying to fully establish themselves in a host of developing economies with a growing entrepreneurial class. These are interesting times.
Russia, the world’s biggest country, is one of the countries that McDonald’s and Burger King are specifically eyeing. Their challenges, as Reuters recently outlined, are quite obvious: 70% of people Russians don’t eat outside the home. Now if you’re a ‘glass half-empty’ international franchisor, maybe you stay away from Russia, figuring that these eating traditions are fixed and rooted in time. But McDonald’s and Burger King are “glass half-full” franchisors. They look at this population of 141million and see a massive chunk of the population ready to trade in gulash for Whoppers. It's the kind of ambition that franchises need to thrive abroad. Remember, restaurants were a novelty during the Communist years. BK are so bullish on Russia they’re opening 40 units in 2010.
And Russia isn’t the only market appetizing QSR franchises. Yum Foods, owner of Taco Bell and KFC, are planning to open 1000 units in India in the next few years, the Wall Street Journal reports. It’s a big leap and even greater proof that America’s food giants think that the world wants "American" food. And as the global economy creates a new middle class in countries like Russia, India and China, I’m tempted to believe them.