The landscape of international business has become rocky recently with natural disasters and human actions throwing hurdles in front of entrepreneurs at virtually every turn. Events such as the banking crisis and credit crunch in Europe, increased oil prices arising from spreading unrest in the Middle East, and the fallout from the Japanese earthquake have contributed to increased market uncertainty. Despite the challenges, the franchise industry has shown its mettle as a resilient industry that can not only remain stable during hard economic times, but grow as well.
Every year, Franchise Direct ranks the foremost internationally-operating franchise companies from around the globe. This literally world-class list details the franchises that are prospering with operations in at least two countries. The Top 100 Global Franchises have been selected from a candidate pool of hundreds of franchises that have invested time and resources in international expansion strategies. Company information was gathered by way of company submissions, Franchise Disclosure Documents (FDDs), and published industry sources. This information was then entered into a formula based upon an objective methodology that incorporates a host of criterion which includes, but is not limited to:
- System size, based on number of units
- Sales revenue for the company
- Number of years in franchising
- Stability and growth
- Support for prospective and current franchisees
- Environmental policies
- Corporate citizenship
With increased globalization over the years, franchises (along with all types of businesses) have access to better economies of scale which have allowed for unprecedented growth and development into foreign markets. All of the Top 100 Global Franchises share the keys to business success at any level including a well-defined business identity, a clear business plan, a commitment to training and support, sensitivity to environmental issues and the ability to innovate to keep pace with ever-changing social and economic conditions. However, on top of these qualities, each of the franchises in the Top 100 have also acquired the necessary linguistic capabilities and combined them with a cultural sensitivity to grow their respective businesses beyond their home borders. Because of these attributes, the Top 100 Global Franchises serve as models for early-stage franchises looking to expand, as well as those businesses considering franchising their offerings.
The Top 10 Global Franchises
|Franchise||2011 Rank||2010 Rank|
|Wyndham Hotel Group*||8||N/A|
*Brands of Wyndham Hotel Group were under consideration as individual entities in previous years
**New to this year's ranking
The companies that make up the 2011 Top 10 Global Franchises are largely the same as last year with the top seven companies all maintaining Top 10 status. However, three companies were able to jump into the Top 10 for 2011 for the first time. Those companies are Wyndham Hotel Group (#8), ServiceMaster Clean (#9), and Top 100 newcomer Choice Hotels (#10).
While the seven companies at the top of the ranking remained similar, there was some movement amongst them in rank, and the most notable move is at the very top.
Subway Rides Its Upswing to the Top
A main factor in Subway's growth is related to their mantra of "Eat Fresh, Live Green," which takes advantage of a widespread mindset of healthier living adopted by consumers over recent years. Subway also has taken a proactive approach in environmental initiatives. Recently, the restaurant chain's first Eco-Store in Kissimmee, Florida (opened in 2007) was awarded LEED (Leadership in Energy and Environmental Design) silver certification. LEED is an internationally-recognized third-party certification for the design, construction and operation of high-performance green buildings. Subway currently has five Eco-Stores, and has several more in varying stages of planning and development, along with incorporating elements of the Eco-Stores into existing restaurants.1
An additional factor in Subway's ascent revolves around franchisee-relations. Subway is franchisee-owned, and offers to prospective franchisees a diverse set of assistance to acquire financing, including Small Business Administration (SBA) Registry eligibility. SBA Registry eligibility allows for prospective franchisees to receive an expedited loan process when applying for financial assistance from the U.S. Small Business Administration. In addition, Subway restaurants are comparatively smaller than its competitors making them less expensive to open and operate.
McDonald's Still Holding Strong
Though McDonald's doesn’t occupy the first position in the 2011 ranking, it's an extremely close second. The restaurant chain is still enjoying impressive growth, and like many other companies, including Subway, is proactively exercising environmental responsibility through corporate policy implementations. McDonald's has also expanded their menu options to include healthier options for their patrons including their much-discussed oatmeal.
A Worldly Presence
Because this list is a global Top 100, international expansion plays a large role in the outcome of the ranking. The approximate average number of countries in which the companies of the Top 100 Global Franchises operate is 26; and of the Top 10 Global Franchises, seven are active in at least 50 countries.
With the United States in recovery mode from the recent recession, several companies among the Top 100 Global Franchises have specific plans to expand international operations in the near future to continue their growth, and here’s just a small sampling of companies with those plans:
- Choice Hotels (#10): The hospitality chain is planning to open 20-30 hotels in India every year for the next three years.2
- Baskin-Robbins (#26): Early this year, the ice cream franchise hired new corporate officers to aid in their growth plans in China, Australia, New Zealand, Korea and Japan.3
- Anytime Fitness (#45): The fitness club network is moving into Qatar through a recent master franchise agreement with The Almuftah Group, a Qatar-based company that is experienced in doing American-based franchising in the Middle East.4
- Cold Stone Creamery (#49): Cold Stone plans to open several new stores in the next five years through master franchise agreements with Kitchen Language (Singapore & Malaysia) and Gustatus Ltd. (Greece & Cyprus).5
- FASTSIGNS (#66): The sign and graphics center is using a "conversion initiative" to grow internationally, including recent conversions in the Caribbean and Canada. New center development is also being utilized in their expansion plans.6
International expansion, however, doesn’t necessarily mean entering countries outside of the United States when it comes to franchising. Just over 15 percent of the companies on the 2011 Global Franchises list have origins in countries outside the United States, making the U.S. one of the goal markets to enter, or continue expanding in, for several companies on this year’s ranking. For some of these companies, they have made the transition into the U.S. market so smoothly that many consumers would be somewhat surprised to learn that their roots lay in another country.
Foreign Companies in Top 100
|Franchise||2011 Rank||Country of Origin|
|InterContinental Hotel Group||11||United Kingdom|
|Engel & Völkers||83||Germany|
*New to this year's ranking