International Expansion Step 1: Engage the U.S. & Foreign Commercial Service

As franchisors explore taking their system internationally, countless issues and questions arise. Immediate questions surround the available resources to determine the market selection, identify candidates, and manage the next steps. The first step in this process should be getting to know the Global Franchising Team at the U.S. & Foreign Commercial Service (USFCS). This is an important first step as 95% of the world’s consumers live outside of the United States.

The USFCS provides strategic business development and advisory services to franchisors across business model verticals. The Global Franchising Team, which is at the crux of the assistance most franchisors require, offers an expansive footprint of domestic and international staff.

Domestically, the team includes International Trade Specialists, or Account Managers, to facilitate introductions, provide research, and guide strategic direction. Account Managers are assigned to franchisors to determine their needs and guide the process with our international staff and commercial Specialists, located in more than 85 countries. The Global Franchising Team, which works with franchisors in most countries, also uses State Department Partner Posts that go beyond those 85 countries. Franchising Team members are knowledgeable in the language of franchising, and when it comes to identifying prospects and facilitating deals, they are always on the search for connections that matter.

Many franchisors make initial contact with the USFCS after they have made the decision to export their brand and systems, or after they already have expanded in a few countries. Once brands begin the expansion process and communicate with industry insiders, franchisors generally find their way to the Global Franchising Team. The team works with franchisors to explore their existing leads, unique needs, and to learn about the value propositions of brands related to setup, core offerings, success factors, and growth needs.

The domestic team serves as brand ambassadors and presents value propositions with international staff at the U.S. Embassies & Consulate Generals. Assigned account managers are integral to helping franchisors align matching services, and are the extra resources needed to watch for prospects, insights, and cues. Account managers assist with a variety of counseling issues, such as registering systems abroad, sorting supply chain and preferred vendors as needed, understanding tariffs and their impact on proprietary system equipment or products, localizing core product offerings for different cultures, and more.

The Global Franchising Team—which offers research, services, and events to move franchise brands closer to their next international contacts for signing deals and opening units—is always looking for additional ways to provide market research and target market modeling to streamline expansion plans, supplemented with franchise-focused events. The team has long been known to promote and complete matching service programs, including the Gold Key, to introduce a series of prospective candidates and suppliers. Additional services include a market assessment product (the Initial Market Check), and a due diligence product (the International Company Profile). Group Gold Keys and Trade Missions are likely to resume in 2025 pending geopolitical stability.

Take your time, patience pays off

Franchising is a complex process, and deal management with multi-unit operators takes time and planning. There are never guarantees that the USFCS or any service provider can help a brand enter a certain market. The reality is that the process is very involved and requires alignment to determine the right approach, concentrate appropriate prospecting, coordinate visits to a market, and to vet potential partners. Each USFCS interaction with development executives is focused on moving brands closer to the finish line with signed contracts and openings.

Servicing franchise operators requires effective communication, information, and marketing materials from franchise clients. For long-term success, franchise systems must have a clear understanding of their core values and offerings and a commitment to get to know candidates. The Global Franchise Team requires well-defined candidate search parameters on industry alignment, capitalization, appropriateness of fit in a given franchise system, and more.

Resells or finding a new partner in a market requires our team to know what has occurred in the present or terminated relationship. New candidates will inquire why the previous relationship was unsuccessful. Reappointing a brand to a market where a relationship did not work takes a longer-term horizon for a resell.

Beyond resells, franchisors must be prepared to 1) search for a partner outside of densely populated and competitive central business districts, 2) enter markets with direct investment at onset, or 3) use non-conventional entry methods, including cloud and ghost kitchens, for example. Franchisors must be prepared to wait for the right candidate and timing, as an area developer unable to fulfill development schedules will not achieve the awareness needed for long-term profitability in a market. To mitigate longer-term issues, the best approach is to wait and appoint the correct partner.

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Franchisors also should know about USFCS assistance provided at the annual franchise expos and conventions. The International Franchise Expo (IFE) kicks off in 2 days in NYC, May 30–June 1 in NYC at the Javits Center.

A trade activator program called “Global Chat” is generally conducted at industry events, providing franchisors with access to trade counseling on brands and systems for market acceptance and approaches. Franchisors receive an advanced opportunity to meet USFCS industry specialists to explore positioning and expansion needs. Further, where the USFCS attends franchise events, the staff typically engages and leads delegations of country investors and can introduce their delegates to U.S. franchise brands.

Getting started with the Global Franchise Team is as easy as reaching out to an Account Manager in a nearby USFCS location. Team members look forward to sharing more plans currently on the horizon and learning more about brand innovations that create jobs, education, and infrastructure globally.

Eric Johnson serves as Director of the Global Franchising Team, for the U.S. & Foreign Commercial Service. He has been a part of the international trade and investment promotion arena for more than 25 years. In addition to supporting franchisors with global expansion, he also trains prospective franchisees globally on franchising fundamentals and proposal development. Contact him at 404-290-2169, [email protected], or visit trade.gov/export-solutions.