Bet the Franchise

What does the future hold for international franchising? Don't let the economy's naysayers dissuade you--our money's on growth.

In the weeks following September 11, threats of war and recession were weighing heavy on the world. But while belts were tightening and employees were being laid off, Arie van der Spek's phone was ringing. People wanted to find out how to join his franchise. "More people are calling us up, interested in documentation or preliminary conversation," says van der Spek, senior vice president and chief quality officer for operations in Africa, Europe and the Middle East at Holiday Inn's parent company, Six Continents PLC.

Many of the people calling van der Spek's office were hotel owners interested in converting to Holiday Inn, one of the company's brands. "Some are pretty nervous, because they are unbranded, do not belong to an international hotel group and are now looking for affiliation," he says. "I'm actually reallocating some resources to see if we can benefit."

When the United States was involved in the Gulf War, van der Spek saw a similar spike in interest. "At that time, we were opening around 55 hotels a year [in Africa, Europe and the Middle East], up from around 35 hotels a year," he says. "So that was clearly a major success for us."

The popularity of franchising internationally makes sense. As the world gets smaller, local brands become globally recognizable. "People come to the U.S. on vacation, see something they like and want to take it back to their country," explains Marcel Portmann, vice president of emerging markets and global development for the International Franchise Assocation.

Meanwhile, saturated local markets are forcing U.S. companies to expand elsewhere. "It's a good time [for franchises] to expand internationally," says Portmann, "especially if they're facing a very saturated or competitive market here in the United States."

If American companies are, in fact, continuing to expand internationally, how does that benefit global entrepreneurs interested in buying a franchise? "The consumer perception gives the international franchisee a better base to start with, as many American brands enjoy universal brand recognition," says Bob Kendzior, vice president of international marketing and retail concepts for Allied Domecq Quick Service Restaurants, franchisor of Baskin-Robbins, Dunkin' Donuts and Togo's. "Any international franchisee who chooses to import one of those brands will usually find it to be a better start-up opportunity than a homegrown brand."

Van der Spek agrees that U.S. franchises offer many advantages. "Since there's hardly any experience of franchising outside the Americas," he says.

Page 1 2 Next »

Like this article? Get this issue right now on iPad, Nook or Kindle Fire.

This article was originally published in the February 2002 print edition of Entrepreneur with the headline: Bet the Franchise.

Loading the player ...

Seth Godin on Failing Until You Succeed

Ads by Google

Share Your Thoughts

Connect with Entrepreneur

Most Shared Stories