A couple years ago, this blog featured the following articles on the trend of international franchises targeting the U.S. market:
A new Entrepreneur Magazine article studies this new trend, some examples of foreign franchisors in the U.S. market, and the barriers to entry to for international franchises wishing to launch into the U.S. market. The article quotes Ray Hays, author of this blog, in addition to franchise owners involved in this trend.
Re-blogged from qz.com courtesy of Ray Hays, Member of Arizona District Export Council.
Coke is so prevalent around the world that non-profits look to its supply chain for help on distributing aid. McDonalds, in 122 different countries, is so widespread that there’s a foreign relations theory that no two countries hosting the burger franchise will go to war, although the strong version of that theory is well dead. And Wal-Mart is the world’s third largest global employer, after the American and Chinese militaries, respectively.
The US must be great at globalization, right?
Unfortunately, no, according to Bhaskar Chakravorti, the director of Tufts’ University’s Institute for Business in the Global Context. He says all these examples represent “the myth of American global market power”—they are outliers that disguise the real failing of American multinationals to succeed around the world, and especially in fast-growing emerging markets. Despite what you might hear, he says “we are extremely under globalized.” Here’s an excerpt from a forthcoming paper he’s written with fellow economist Gita Rao (emphasis mine):
In 2010, emerging markets represented 36% of global GDP; these markets already account for the majority of the world’s oil and steel consumption, 46% of world retail sales, 52% of all purchases of motor vehicles and 82% of mobile phone subscriptions. With two-thirds of global growth coming from these markets, in a decade they will account for the majority of the world’s economic value. Yet U.S. companies derived less than 10% of their overall revenues from emerging markets: about as little as 7%, according to HSBC estimates for 2010. The 100 largest companies from the developed world overall made 17% of their revenues from emerging markets, according to a McKinsey report; in other words, the U.S. lags not only emerging market firms in capturing share in emerging markets, but it lags the developed world overall. By considering the difference between the “absolute potential” represented by the 36% number or, to take a much more conservative benchmark, the global peer average of 17% and the U.S. share of 7%, we derive two measures of the gap – and the degree to which U.S. industry has not participated in global growth.
There are several reasons the US is being held back. Some are the intrinsic challenges of doing business abroad: Besides language and cultural barriers, there are underdeveloped supply chains, incomplete capital markets, corruption, etc. But European companies earn 25% of their revenues from emerging markets, so these must be surmountable. What’s America’s problem?
America doesn’t have a legacy of colonization. Despite a hefty history of foreign interference, the US didn’t set up the same deep linkages that Spanish and Portuguese companies did in South America or European countries have in Africa or South Asia. Chakravorti, who was a McKinsey executive for many years, recalls European competitors in Africa asking, ”What are you doing in Africa? Africa belongs to us.” Meanwhile, he says, ”the executives I was working with had no understanding of the socio-cultural context of the continent.”
America is actually pretty insular. Because it’s a big country, and has had many decades of consumer-driven growth, US businesses haven’t necessarily had to look over the horizon for new opportunities. After the 9/11 attacks, Chakravorti says, things got even worse, and most businesses stayed home. It doesn’t help that less than 20% of Americans speak a language other than English, while 56% of Europeans speak a second language.
American business is all about standardization. Companies get economies of scale from selling the same product, but many emerging markets are stratified and require different products and price-points in the same country; while American executives want a ”Brazil strategy,” what they really need is a strategy for Sao Paulo state and another for more rural areas.
Chakravorti argues that American companies do have what it takes to surmount these challenges, and they’ll need to if they want to bring more growth back to the US.
His strategy starts with a focus on sectors where America can compete abroad but isn’t taking full advantage of the opportunities, particularly in consumer products and large-scale services such as education, elder- and child-care. American companies need to start thinking about tailoring their strategies to demand abroad—particularly at the bottom of the pyramid— but the market can’t do it alone: The government needs to work more closely to tailor its foreign policy to America’s commercial needs while opening education to a more international view.
“That gap has been closed completely in China, because the most powerful companies are state-owned,” Chakravorti says. “We are still talking about the Asia pivot as though it is something dramatic and new, while China has been pivoting for a while.”
Original article link: http://qz.com/59506
When you think of healthcare, franchising does not immediately come to mind. Drive through clinics? Franchised hospitals? Not likely, but the home healthcare and medical staffing sector is ripe for franchise growth. One highly awarded U.S. franchise company, BrightStar Care, proved that quality home healthcare and medical staffing works very well as a franchised concept.
BrightStar’s proof is in the numbers. With a 3-year revenue growth rate of 433%, BrightStar is the most successful medical franchise in the U.S. BrightStar Care was ranked in the Inc. 500 list of fastest-growing private American companies from 2009 to 2011, and it is currently ranked #54 of the fastest-growing private U.S. health sector companies. With a field of thousands of U.S. franchise concepts, Entrepreneur Magazine ranked BrightStar Care #21 in their list of the Fastest-Growing Franchises for 2012.
Franchises are not new in the care sector. Over the last decade, multiple countries have experienced a boom in non-medical care franchises. However, non-medical services by definition do not cross the line into licensed medical care. This is where BrightStar Care broke the mold.
BrightStar has about 250 agencies that offer a range of services, including medical staffing, home healthcare/ home nursing, as well as non-medical care at home. Among home healthcare and medical staffing services, BrightStar is the first to successfully franchise these services on a national scale. By comparison, non-franchised home healthcare or medical staffing companies tend to remain confined to local or regional markets without the national scalability and rapid time-to-market that the BrightStar franchise offers.
Of course, Australia and U.S. healthcare markets differ in many ways. To become a successful player in Australia, BrightStar clearly understands that it will need to adapt its business model to fit the Australia market. For this reason, BrightStar is seeking a Master Licensee, who brings the local healthcare sector know-how and market experience to localize the business model and build a true Australia brand leader.
BrightStar’s Master Licensee in Australia will have the flexibility to open Master-owned locations or sell franchises into select markets. Depending on the Master Licensee’s expansion strategy, the total capital required will be in the range of AUD $500,000 to $1,000,000.
BrightStar Care is represented by franchise management firm EGS LLC., based in California. To arrange a meeting in Sydney on 5-6 February or in Melbourne 7-8 February, please contact the EGS representative:
By Ray Hays, International Consultant and Member of the Arizona District Export Council.
Re-blogging of this post is permitted and encouraged.
As many U.S. small and medium-sized enterprises (SMEs) compete for revenue from new markets, they often overlook the global picture: Promote your products and services internationally. While it sounds daunting, it’s often a simple matter of funding and international expertise to sell your products and services into global markets.
What if your company had the opportunity to leverage international business experts from the public and private sector to market your product internationally? At no cost?
Welcome to the best kept public secret in international business.
The Small Business Administration (SBA) offers grants through the State Trade and Export Promotion Grant (STEP) program. Over the last year, $30 million in export promotion grants were awarded through the SBA, and the same amounts are expected for 2013 and 2014
The rules and amounts of the grants will vary by state, but in many cases, U.S. exporters of products and services are eligible for thousands of dollars in export promotion grants.
Depending on the state, these grants may be applied toward the travel and fees of several export promotion opportunities:
As a (very rough) example, a Trade Show may require a travel budget of $5,000 and exhibition costs of $5,000. Some U.S. companies can qualify for reimbursement of 75% or more of the travel cost and 100% of the exhibition costs through the STEP Grant program. This would bring the cost of a $10K trade show into the range of $1,250… Other export promotion activities may be covered in-full.
Of course, a U.S. company should not strike out blindly into the international marketplace. Your company will need to identify target markets, evaluate risk/returns based on the country regulations and demographics, build a model for international expansion and finally, execute on this plan.
If you do not have the international expertise in-house, you can work with a U.S. contractor — a consultant or management firm — to plan and deploy the export promotion strategy.
Whether your company builds an international team in-house or contracts international management specialists, this would be a good time to take action. The second year of SBA STEP Grants are already awarded, and the third (and final) year of STEP Grants are awaiting proposals. Go get your piece of the international pie.
In addition to these grants, export financing programs for SMEs are available through SBA and Overseas Private Investment Corporation (OPIC).
For resources, please contact your regional District Export Council (Google it for your state), or the nearest U.S. Commercial Service Export Assistance Center.
Having personally participated in over 40 international events and trade missions through the USCS, I highly recommend using their services. I am currently a Member of the District Export Council in my home state of Arizona, which works closely with the USCS on export promotion efforts.
Regardless of your location, please feel free to contact me if you would like more information on these programs, and I would be happy to point you to the appropriate export assistance resource in your local market.
This article is based on current knowledge to-date of STEP Grants based on various government websites. The program details may vary by state and rules are often updated. For the latest information please click on this link for the SBA website page on the STEP Grants.
Please re-blog or re-post this article to your social media groups and professional contacts interested in international business.
Copyright Ray Hays, Envoy Investments LLC. All rights reserved. Re-blogging of this post is permitted. Referrals to http://www.rayhays.com are appreciated.
Ray Hays owns Envoy Consulting, which provides international business development guidance for U.S. product and service exporters. Ray is a Member of the Arizona District Export Council. Email: email@example.com, cell: 714-797-3386, Skype: Ray_Hays.
Chile loves American products. Last week, at a Trade Mission reception in Santiago, Chile, I enjoyed skewer hors d’oeuvres of fresh California strawberries and Hawaiian pineapple.
Add a few other U.S. imports, such as the Apple Store and KFC, and you will see that American brands abound. For decades, Chile has offered an economically stable and receptive market for U.S. brands. If you stroll through a shopping district or visit any mall, you will see diverse logos of American services and products.
Colombia is often overlooked as an opportunity for U.S. exports. Having attended the U.S. Franchise Trade Mission to Latin America last week, I can attest to the fact that Colombia is open for U.S. business. If Colombia is not on your list of export target markets, think twice!
Along with dozens of other U.S. franchise concepts, I joined this Trade Mission to promote U.S. franchises to Latin American investors. Panama was our first stop. The market is booming, and U.S. franchisors found high levels of interest in introducing new American franchise concepts.
Our international franchise management company, EGS, represented a range of franchisors, including Sport Clips® Haircuts for Men, BrightStar Care®, Rita’s Italian Ice®, Fuddruckers®, Round Table® Pizza, and The Melting Pot®.
The U.S. Commercial Service in collaboration with Franchising Group EGS is promoting 5 established U.S. Franchise Concepts, who are seeking Area Franchisees and Master Franchisees in Mexico. Investment requirements start at US$150,000.
Meetings with candidates will be held Tuesday, June 26 and Wednesday, June 27.
For more information, click on the Summary links below to view more details on the franchise concepts, candidate requirements and financial metrics.
Contact at U.S. Trade Office in Mexico City: Martha Sanchez, firstname.lastname@example.org, Tel: (55) 5140-2612 / 5140-2621.
USA Contact: Ray Hays, EGS, email@example.com, Tel: (+1) 714-797-3386
If you are in the Clean Energy sector, you should be aware of this event. Reblogged courtesy of Ray Hays, Member of Arizona District Export Council.
April 14–18, 2012
U.S. Clean Energy and Energy Efficiency Trade Mission to Saudi Arabia
Riyadh and Dhahran (Eastern Province), Saudi Arabia
In April, Assistant Secretary Nicole Lamb-Hale will lead a Clean Energy and Energy Efficiency Trade Mission to Saudi Arabia. The mission will include market briefings by industry experts, opportunities for U.S. firms to meet key Saudi Arabian government officials and decision-makers, hold one-on-one meetings with potential business partners, and enjoy networking events, with the goal of increasing U.S. exports in the clean energy and energy efficiency sectors.
The mission comes at a critical time for both Saudi Arabia and the U.S. clean energy and energy efficiency industry, and has the potential to create opportunities for U.S. exporters while helping Saudi Arabia to achieve its energy goals.
Saudi Arabia has ambitious plans to improve energy efficiency and reduce reliance on hydrocarbons for power generation. These plans offer abundant opportunities…
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Is your franchise concept ready to go international?
What are the pitfalls of launching your international franchise program?
What are the resources and budget requirements to launch a global franchise expansion program?
Join Ray Hays, as he discusses these questions and more with Franchise Today radio hosts Paul Segreto and Joe Caruso. Click here to listen to interview taped October 13, 2011.