GROWING YOUR SYSTEM
International
2015 World Outlook
Country-by-country economic forecast
BY WILLIAM G. EDWARDS
2
015 is starting out as a very busy
year for international franchise
development. U.S. franchises
are exporting their brands more than at
any time in history—and to more places.
Last year ended with the highly successful opening of Burger King in India,
and Carl’s Jr. signing a 150-unit license
agreement for Japan. Build-A-Bear Workshop opened its first two stores in Turkey to high sales. Anytime Fitness has
reached almost 20 countries. Title Boxing
Club opened its first international unit
in Cancun. Five Guys continues to add
new locations in the U.K. at a rapid rate.
Fuddruckers opened in Italy. Popeyes is
now open in 27 countries. Abrakadoodle
continues to add units in China.
Food and beverage (F&B) franchises
continue to be the leaders in global franchising, but education, retail, and service
sector brands are becoming increasingly
desired. Education and F&B brands are
most desired in the emerging markets.
Established markets such as the U.K.
desire service and retail franchises.
The December 2014 IFA/U.S. Com-
mercial Service Franchise Trade Mission
to three cities in India introduced 14
U.S. education, F&B, retail, and service
brands to this growing market. In 2015
the IFA and Commercial Service plan
Food and beverage
(F&B) franchises
continue to be
the leaders in
global franchising,
but education,
retail, and service
sector brands
are becoming
increasingly
desired.
franchise trade missions to the Nordic
countries and to Southern China and
Taiwan.
Let’s take a tour around the world
to see where franchising is expected to
happen in 2015. GDP growth projections, in parentheses, are from the
Economist magazine and the World
Bank (December 2014).
Africa
• Nigeria (World Bank,
1.0%; IMF, 7.0%) – Although
2014 saw the opening of a few
U.S. F&B franchise brands,
political and economic unrest,
a high level of corruption, and
lack of rule of law will keep many
foreign brands from entering this
large country in 2015.
• South Africa (-4.7%) – Economic and political unrest is balanced
by the desire of the new middle class
68
for international brands rather than the
older indigenous brands.
The Americas
• Argentina (1.5%) – Political and
economic unrest means little capital for
new projects and barriers to getting paid
fees and royalties.
• Brazil (2.7%) – Dunkin’ Donuts
recently announced a new licensee. Otherwise the difficult entry barriers, lack
of investment capital, and high pricing
will limit new entrants in 2015.
• Canada (2.4%) – Burger King and
Tim Hortons merged. Fast casual F&B
continues to grow in major cities.
• Chile (4.5%) – Denny’s and Fuddruckers opened units. A government
change means more business and consumer taxes, which has decreased new
investment.
• Colombia (4.5%) – Starbucks finally
entered. There is a great desire for more
franchise brands, but there are challenges
finding capitalized licensee candidates.
• Mexico (3.5%) – Mexico City, Monterrey, and Cancun are “safe” markets and
are seeing new brands and units opening.
• Peru (5.6%) – There is a new U.S.
Commercial Service post in Lima that
is franchise-friendly. Many U.S. F&B
brands are present already. The growth
of a substantial middle class is positive
for more franchises to enter this country.
Near East and Asia/Pacific
• Australia (2.8%) – Carl’s Jr. paired
with Restaurant Brands after great success in New Zealand. Australia is the
most franchised country in the world,
with a high percentage being local brands.
• China (7.5%) – International F&B
brands have challenges with food quality
and sourcing that have resulted in drops
in unit revenue across the country. Service
franchises are not yet desired. Education
franchises, such as Abrakadoodle, do
well because families want to give their
children an edge.
• India (6.3%) – During December’s
IFA/U.S. Commercial Service Franchise
Trade Mission to Mumbai, Bangalore,
and New Delhi, we saw evidence of thriving franchise growth in all three cities.
Despite the many challenges involved
in entering the Indian market, strong
reasons to give serious consideration to
taking your franchise to India include:
the country’s 250 million to 300 million
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