Saturday, 12 December 2009 09:00 | Author: Joshua Adekane |
International franchising involves far more than American-based monoliths such as Coca-Cola peddling soda pop through franchisees in 200 nations, or KFC selling meals in 80 countries, or General Motors establishing "master franchise" arrangements in 192 nations.
by JoshuaAdekane
International franchising involves far more than American-based monoliths such as Coca-Cola peddling soda pop through franchisees in 200 nations, or KFC selling meals in 80 countries, or General Motors establishing "master franchise" arrangements in 192 nations.
Most of the international franchises show on a smaller percentage, with countries in the global economy exporting as well as importing.
The International Franchise Association reports that the U.S.-based Arthur Andersen accounting firm conducted a national survey to the franchise associations in 39 countries. These associations were asked to name the number of franchisors and franchisees in each country, their country's total retail volume, and the percentage of the volume that involved franchising.
"The survey found that growth potential for franchising worldwide is increasing at a very fast past. The global market is far from saturated," said Leonard Swartz who, at the time of the survey , was Arthur Andersen's worldwide managing director of franchise services.
The franchising giants have their special niches. For example, Coca-Cola sends a syrup concentrate to franchise bottlers because it cannot ship such high volumes of whole bottles and cans. Kentucky Fried Chicken still relies on its secret herb recipe for franchises across the globe. General Motors has franchises that deal not only in vehicle sales, but also in vehicle financing and in real estate.
Franchising monoliths indeed are monoliths. KFC is just one franchising brand owned by Yum! Brands Inc. Others are Taco Bell, Pizza Hut, Long John Silver's and A&W. So, if you see these fast-food franchise brands clustered together, now you know why.
But keep in mind that in all countries across the planet, the main economic engines are small businesses, including small franchises. People want more than sodas, fast food and cars.
For example, there is a demand worldwide for improved education. An American art teacher named Bette Fedder took advantage of this opportunity and started a drawing school in her home. She then compiled a curriculum and began to recruit franchise operators. Young Rembrants now has franchises all over the country and started operations in South Korea, with plans to expand to other international markets . Other after-school tutoring companies have franchises that focus on various disciplines including writing, science and math.
Global Trade means that more orders than ever are shipped internationally. UPS may dominate, but smaller companies are also experiencing strong growth such as P.A.S.S. Shipping and Handling which has 800 franchise stores around the world.
The International Finance Association explores the costs and benefits of becoming a franchisee. You'll have to pay a one-time upfront franchise fee to the franchisor -- anything from $50,000 to open a Little Caesar's pizza parlor to $800,000 for a Comfort Inn, for example. You may also have an arrangement that involves a royalty contribution or "turnover royalty" as a percentage of monthly gross sales, and an advertising contribution to the parent company.
Once you're a franchise owner, you can rest assured that the franchisor wants you to succeed. Once you qualify, you will receive plenty of upfront assistance and advice. There are some exceptions, especially in the international market, but most companies want their franchises to be similar from one location to another so that customers know what to expect.
If you are looking for franchising opportunities, beware of companies that describe themselves as "fast growing".Growth is definitely good but be careful that a franchise is not moving too fast and that the company overextends with too many new franchises at once. Look for a company with consistent and steady growth is your best franchise bet.
Other international franchising opportunities includes technology, cleaning services, home health care, home improvement/design/repairs, health and beauty, sports, travel and hotel just to name a few.