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.
Much of the international franchise interplay is on a smaller scale, 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, before it closed, surveyed national franchise associations in 39 countries. These associations were asked to name the number of franchisors (parent companies) and franchisees (local stores) in each country, their country's total domestic retail volume, and the percentage of the volume that involved franchising.
"The survey found that growth potential for franchising worldwide is exponential. The global market is far from saturated," said Leonard Swartz who, at the time of the survey eight years ago, was Arthur Andersen's worldwide managing director of franchise services.
The franchising giants have their special niches and are entrenched in dominance. Coca-Cola sends a syrup concentrate to franchise bottlers because it can't ship such a volume of whole bottles and cans. KFC still relies on its "11 herbs and spices" secret recipe for franchises from Argentina to China and 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 in nations across the planet, the main economic engines -- in good times or in tough times -- are small businesses, including small franchises. People want more than soda pop, fast food and motor vehicles.
For example, there is a hunger worldwide for improved education. An American art teacher, Bette Fedder, started a drawing school in her Midwest home. She then compiled a curriculum and began to recruit franchise operators. Young Rembrants now has franchises across the country and in South Korea, with plans to expand internationally. Other after-school tutoring companies have franchises that focus on general education, writing, science and math.
The global economy may be rooted in the World Wide Web, but it also means that more packages than ever are shipped internationally. The big boys such as UPS may dominate, but there also are smaller companies involved. P.A.S.S. Shipping and Handling 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 seeking a franchising opportunity, do not be overly persuaded by companies that describe themselves as "fast growing" or "hot" or "on fire." Growth indeed can indicate that a company is moving toward success, but sometimes the pace of growth is too speedy and the company overextends with too many new franchises at once. A company with consistent and steady growth is your best franchise bet.
A sampling of other international franchising opportunities includes computer technology, cleaning products and services, home health care, home improvement, health and beauty, sports and recreation, travel and hotel. Those are just a few.
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