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While franchising can be considered mostly a local endeavor—approximately 50% of franchise brands in the U.S. are considered “local” in scope, many franchisors set out with a dream of becoming the next big international franchise brand. Fortunately for those ambitious brands, there are numerous options for franchisors hoping to expand beyond the United States soon.
“Despite various economic and political challenges, the global franchise development sector is looking robust overall as we come out of the pandemic,” says Bill Edwards, CFE and CEO of Edwards Global Services. “There’s currently a pent-up demand for new franchise investments in many countries.”
Among the countries Edwards terms as “franchise-friendly” for the coming year is Egypt, where “there’s immense new investment going into building the New Cairo and high-end shopping malls that need new brands in the country with the largest population in the Arab world.”
Other positively-trending countries include Australia, where interest in new franchise investment is reportedly “at a 10-year high.” France, where “interest in new franchise brand investment is projected to be strong in 2023.” And Israel, where “the relatively small population size is offset by a high GDP/capita and high consumer spending.”
India is another country that looks promising as it could “have the highest GDP growth level in the world as they recover from the impact of the pandemic. New franchise brand investment should be multisector throughout 2023.”
On the other hand, however, significant challenges persist in some countries. For instance, proximity to the Russia/Ukraine warzone is dramatically affecting franchise expansion in nearby countries such as Poland and Romania. And on the economic front, inflation rates above 70% are stunting franchise growth currently in Argentina and Turkey because of the high costs associated with startup.
Avoiding Mistakes When Going International
When franchisors do take on international expansion, avoiding the common pitfalls will help immensely. Even great products and services can fail if the proper steps haven’t been taken to introduce a brand to a new area. As Raghav Patel of Global Franchise Magazine wrote, international expansion is “not an impossible process; many brands have successfully expanded around the globe, and learning from them is key.”
According to Patel’s article, there are three main areas franchisors commonly make mistakes in when going international: localization, talent, and readiness. In addition, franchisors making the leap also need to align themselves with the right advisors. No matter how much research and planning you do, your first time is still your first time. You don’t know what you don’t know about business in different locales.
“It’s essential to work with experienced consultants and [have] the ability to say no to the wrong franchise group,” says Dan Rowe, founder and CEO of restaurant franchise development company Fransmart. “Whatever cost and time you think it will take, it’s diligent to assume that it’ll take double to get ahead of any unexpected costs, even if that doesn’t turn out to be the case.”
Working the right local advisors will also serve you well when you seek to maintain a foothold in different markets. “Brands are best served when we align with the needs and the vision of the communities that we live in,” says Ed Quinlan, president of Chem-Dry, a franchise that spans 55 countries. “Showing the community we care across the board is the unsung hero of global success.”