2020: What To Expect in International Franchise Development, Part 2
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 2, and includes perspectives from the U.K., Central Europe, and the United Arab Emirates.
Iain Martin, International Franchising Consultant, The Franchising Centre (UK)
As most readers know, the political shenanigans continue in the U.K., which means that we still have no clarity about if and when we will leave the European Union. This creates uncertainty in the investment marketplace, and my experience is that decisions are being deferred until we have a stable landscape within which to operate (either in or out!). This tends to affect higher-value businesses, especially where long-term commitments are required, or the supply chain includes imported goods. In addition, the changing face of retail (e-commerce rather than bricks and mortar) means that property costs can seem disproportionately high - and landlords are being slow to recognize the changing reality. However, there are opportunities for retail concepts where customers must be present (e.g., certain types of entertainment, food, and some health and beauty concepts). Landlords will need to drive traffic to their malls, etc. to justify the rents charged. The changing demographics of the U.K. mean that personal services such as home care are in demand. A slowing housing market, the result of less frequent house moves, means that home services (renovation, remodeling, etc.) are in demand. Some food and beverage concepts continue to thrive. Coffee brands are in high demand, although customers are looking for points of differentiation. Good quality coffee is a given - it's the other elements of the customer experience that make certain brands attractive. The days of the Starbucks "lookalike" are drawing to an end!
Daniel Szollosi-Nagy, Your Concierge Consulting (Hungary)
The Czech Republic, Hungary, Poland, and Slovakia have similar levels of economic development and can be treated as one for the purpose of franchise development. Having emerged from a Communist market structure 30 years ago, and having joined the European Union 15 years ago, these countries have a combined population of nearly 65 million, around 12 percent of the total EU population. Compared with the U.S. and EU average, these countries are underserved by franchises as a proportion of the retail sector. With these countries increasing their GDP at a faster rate than the rest of the EU countries, there are significant growth opportunities for U.S. franchisors. The key to a successful market entry in this region is the ability to adapt franchise concepts and terms, advertising, and capital requirements to each market. Brands without a global brand awareness must be prepared to commit sufficient resources.
Sanjay Duggal, Vice President of Business Development, Middle East and North Africa Franchise Association, (Dubai)
Because of saturation in the retail and food beverage space (which is also challenged by online selling), new sectors of franchising are being explored more actively. The UAE has witnessed its own significant growth in franchising over the past two decades, most of which has come from corporate investments. But franchising isn't meant to be just a corporate domain, nor is it meant to be monopolized by a few sectors. With the culture of entrepreneurship getting stronger by the day, there are countless individuals from various backgrounds desiring to carve out their own niche in the business universe. Whereas the recent migration of unconventional franchises from the fringes to center stage might be partly due to the Millennial mindset, it is also the result of circumstance, with some sectors saturated while others are grossly underserved.
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 email@example.com or +1-949-224-3896.
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