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.
American concepts have historically dominated the franchise sector on a global level. During the late 20th Century, franchising, along with Hollywood, played a pivotal role in the projection of the American culture and brands. We can find McDonald’s from Moscow to Melbourne, Curves fitness centers from Caracas to Cape Town. The domination of American franchises seems all but unstoppable.
However, a few decades ago, a quiet insurgency emerged in the form of non-U.S. franchise concepts. The manifestation of this rebellion can be seen in four concurrent trends:
1. Boom of national “home-grown” franchises outside the U.S. –
2. International expansion of non-U.S. franchises –
3. Entry of foreign franchises into the U.S. –
4. Foreign acquisition of U.S. franchise brands –
Despite the foreign franchise insurgency, the U.S. position remains pre-eminent in the franchise sector, at least for now. This U.S. dominance is even seen in the home markets of highly developed European franchise concepts. According to the website Franchise Europe, of the top 100 franchises represented in Europe (in number of locations), 34 are American-owned franchises. Interestingly, if you compare the top 500 franchises in Europe, only 45, or less than 10%, are American franchises.
This suggests that the U.S. is leading the pack at the top of the European market (about 1000 units or more), but European concepts dominate their markets among the medium and small franchises under 1000 units. Similar trends are seen in other global regions as small international franchises enter the market.
Think about it. Franchising is a unique sector in which U.S. companies continue to dominate on a global scale. U.S. franchises have not given up significant market share to foreign companies, at least compared with the American auto industry, financial sector and increasingly, the IT sector.
In short, the U.S. has maintained its competitive advantage in the franchise sector for more than 50 years. This might be attributed to American innovation or perhaps the marketing power of American brands. However, the advance of the non-American franchise concepts continues.
What do you think?
My next article will touch on the second question:
What are the facts around foreign franchises entering the U.S. market, and can they succeed on the American franchisors’ home turf?