China is hot, as is much of Asia. So is Latin America. Hot for what? For expansion-minded U.S. franchise brands seeking growth opportunities. In a trend that accelerated with the onset of the Great Recession, U.S. franchisors have been looking overseas with greater focus for the past three-plus years.
Canada, Mexico, and the Caribbean, as well as European and English-speaking countries have been the traditional starting points for overseas expansion. However, with the world's economy expanding most rapidly in Asia, South America, and some parts of the former Soviet bloc in Eastern Europe, and also in parts of Africa, international expansion truly is becoming "international" as the rest of the world catches on to the growth opportunities of franchising "American style."
Hotels have long led the charge in international expansion. Three recent examples from 2010: Carlson signed a deal to build a $23 million, 118-room upscale hotel in Thailand, its third in the country. Starwood Hotels & Resorts plans to open 49 new Sheraton hotels in 15 countries over the next 3 years, about 90 percent outside North America, including 28 in China alone. And Home2 Suites, a mid-tier hotel franchise concept targeting the extended-stay guest, received approval to develop in Mexico; and in late 2009 received the green light to build in Canada.
U.S. food franchisors - QSR to casual - also have gone global with increasing intensity as consumers in emerging economies respond to the cachet of established American logos selling pizza, burgers, tacos, and chicken, as well as more casual dining experiences . For example, in 2010: Taco Bell returned to the U.K., opening its first new unit in the country since 1986; in Korea, Jamba Juice signed a master development agreement to develop 200 locations in the next 10 years; Figaro's Italian Pizza opened its first restaurant on the island nation of Cyprus; in Saudi Arabia, Dairy Queen signed an agreement to open a projected total of 32 locations by 2015, and is looking to add almost 300 new units in China to the 300 it already has there; P.F. Chang's announced a deal to develop eight restaurants in the Philippines over the next five years. And behemoths such as McDonald's and Subway continue to add to their more than 30,000-unit international empires, while Starbucks added its 300th unit in Mexico. And KFC announced plans for 1,400 units in Africa by 2014 (with more than 600 units in Africa, mostly in South Africa, Yum! Brands is targeting emerging markets including Angola, Ghana, Nigeria, and Zambia).
And, while less conspicuous, residential and commercial service brands have been selling master franchise licenses for years across the globe, and continue to expand in countries and regions where disposable income is on the rise; and many have begun selling franchises directly overseas. In 2010, for example: Right at Home signed a master franchise agreement in Brazil, following the brand's launch in the U.K.; Anytime Fitness continued its international expansion with a master franchisee agreement for Japan to have 30 units operational by 2012, and more than 300 within 10 years (the brand has more than 100 clubs open in Canada, Australia, New Zealand, Mexico, and India); Jazzercise, with operations in 32 countries, signed a license agreement for Egypt; and PODS opened its first franchise location in England, in Leeds, (the brand already operates in Australia, Canada, and the U.K.).
|California Pizza||China, India|
|Chuck E. Cheese's||Guam|
|Dairy Queen (IDQ)||China|
|Intercontinental Hotel||Kuala Lumpur|
|Marble Slab Creamery||Australia|
|McDonald's||China, South Korea|
|Robeks Fruit Smoothies||Asia|
|Buffalo Wild Wings||50 units, 5 years|
|Jamba Juice||125 units, 10 years|
|Nestlé Toll House Cafe||Vancouver|
|Cantina Laredo||U.K., Ireland|
|Domino's Pizza||Germany, Romania|
|Doubletree by Hilton||Romania|
|California Pizza Kitchen||Mexico|
|Charley's Grilled Subs||Dominican Republic|
|Fairfield by Marriott||Brazil|
|Great Steak (Kahala)||Mexico|
|Johnny Rockets||Chile, Mexico|
|Krispy Kreme||Dominican Republic|
|P.F. Chang's||Puerto Rico|
|Pizza Hut, KFC||South America|
|Right at Home||Brazil|
|Smoothie King||Cayman Islands|
|Starbucks||El Salvador, Mexico|
|Darden Restaurants||Bahrain, Egypt, Kuwait, Lebanon, Qatar, Saudi Arabia, UAE|
|Dairy Queen (IDQ)||Saudi Arabia|
|El Chico Café||Saudi Arabia|
|Figaro's Italian Pizza||Cyprus|
|Gold's Gym||Bahrain, Oman, Qatar, UAE|
|Intercontinental Hotels||South Africa|
|Sylvan Learning||Bahrain, Egypt, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, UAE|
|Yum! Brands||Angola, Ghana, Mozambique, Namibia, Nigeria, Zambia|
21.11: International Franchising
22.1: Marketing Skills for Franchisees