2020: What To Expect in International Franchise Development, Part 1

Despite the political, economic, and trade “festivities” going on around the world today, there are increasing opportunities for new franchise global development in 2020 and beyond. I asked international franchise specialists in my network who reside and work in various regions of the world for their advice for 2020. This is part 1 and includes perspectives from the U.S., Canada, and Central America.

Rosemarie Hartnett, President, Abrakadoodle (US)
As franchising continues to mature in countries around the world, international franchise brands face greater requirements for adherence to franchise regulation overseas. While this can raise the responsibilities and the expense of taking your brand international, this maturity also drives growing opportunities in these international markets. The interest in franchising is also evident in the growing number of countries seeking educational courses and mentorship from the U.S. through programs offered by the IFA and the ICFE program. While food concepts continue to be among top brand expansions overseas, children’s educational concepts born in the U.S. also continue to reflect positive growth among investors looking to build quality educational programs for children through U.S. franchise brands. American franchisors across all industries can expect better-educated international franchise candidates with high expectations for initial and ongoing support and training. And that’s a good thing!

Marc Muskin, VP International Sales & Development, CKE Restaurants (US)
(Note: CKE operates in more than 30 countries.) For U.S.-based franchisors, the coming year carries irony in its very name: we use the term “20/20” to describe perfect vision, but nothing could be further from the truth about the outlook for next year. What to expect in the next year is unclear and uncertain. From major political elections to trade relations, currency rates to interest rates, nobody can predict where things will be by the end of 2020. And in high-investment international franchising that’s disruptive, to say the least. From Turkey to Brazil, Canada to the Philippines, the United Kingdom to Australia to the Middle East we are seeing business conditions change, positively or negatively. Either way, investors are generally taking a wait-and-see approach to new ventures. Smart, well-established franchisors can get through 2020 as long as they keep a steady hand on the fundamentals: open and transparent relations with franchisees; consistent, positive brand management; and sticking to the fundamentals of healthy franchising; rigorous selection criteria for new franchisees; and prudent deal points reflecting these uncertain times.

Ned Levitt, Partner, Dickinson Wright, Toronto (Canada)
Looking into my crystal ball for 2020, the influence and impact of franchising in Canada will continue to increase. We will see more foreign franchise brands moving into Canada, which will present increasing opportunities for Canadians to become master and multi-unit franchisees. Currently, the greatest activity is in the business sectors offering services and products for seniors and, at the opposite end of the life cycle, for children. The marketing of franchise opportunities is changing rapidly in Canada, as it is around the globe. In 2020 we will see less and less franchise marketing activity in print and at trade shows and more activity online. Finally, Canadian franchisors have discovered that there is a world outside of Canada. More Canadian franchisors will attempt international expansions in 2020 than have ever been done before.

Jose Enrique Tellez, US Commercial Service Franchise Specialist (Retired), Panama City
Central America is highly receptive to U.S. franchises. Panama, Guatemala, and Costa Rica have the strongest economies in Central America and therefore are the most promising markets. The development of a strong middle class in Central America, as well as the construction of modern shopping malls, favors the establishment and expansion of franchises in major cities. There are approximately 300 franchise concepts in Central America. More than 90 percent of the total number of franchises in the country are from foreign countries. The U.S. is the market leader with participation above 60 percent of foreign franchises. Food franchises represent about 70 percent of the franchises in Central America. But the market is opening for other concepts such as retailing, health care, gyms, education, hotels, entertainment, real estate, etc. Main factors determining successful market penetration are brand name recognition, competitive prices, good support, product quality, and strong promotion. There are no special laws regulating the franchising sector.

 Next time: Part 2, Perspectives from the United Kingdom, Central Europe, and the United Arab Emirates.

 William Edwards is the CEO of Edwards Global Services (EGS). From initial global market research and country prioritization to developing new international markets and providing operational support around the world, EGS offers a complete international operations and development solution for franchisors based on experience, knowledge, a team on the ground in more than 40 countries, and trademarked processes based on decades of problem-solving. Contact him at bedwards@edwardsglobal.com or +1-949-224-3896.