Get All Access for $5/mo

International Franchising After September 11 How to decide whether to continue with your international expansion plans

Q: I am a franchisor with 82 units in the United States. I had planned to expand my business overseas and hire a franchise salesperson for international sales during the first quarter of 2002. Before I make this kind of investment, I am wondering what effect the terrorist attacks have had on American franchisors. Do you think this is a good time to go international?

A: Your question is very timely. Both McDonald's and KFC experienced some trouble at a few their restaurants in countries with a militant Muslim population right after the attack on the World Trade Center, but the trouble was short-lived. These disturbances did, however, generate some debate within the franchise community about whether the events of 9/11 would have a negative impact on the value of American brands and hamper U.S. franchisors doing business overseas.

While we can make no guarantees about what the future holds, we can report that those franchisors we've talked with are still positive about their international operations. Most have received strong messages of support from their existing international franchisees. One franchisor whose annual convention was in Palm Springs, California, at the beginning of October was especially pleased that his master franchisee from Saudi Arabia made the trip to attend the conference.

Several franchisors noted that in the days immediately following September 11, the number of international inquiries they received dropped substantially, and those who were working with prospective franchisees in largely Muslim countries had a difficult time keeping the discussions moving forward. But, they tell us, business has pretty much returned to normal.

Learn more about franchising with Michael Seid and Dave Thomas' Franchising for Dummies.

One issue that may cause franchisors to rethink and readjust their international programs is the ability for foreigners to obtain visas to visit the United States. All indications are that visa requirements will be tighter and more heavily controlled in the future. This will impact two areas:

1. Those people wishing to purchase a franchise may have a more difficult time obtaining a visa to visit their prospective franchisor in the United States. Delays in visas may delay the franchisee recruitment process.

2. Training visas also may be more difficult for those coming to the United States from some countries, and franchisors may be required to provide more training in regional locations outside the U.S. or via the Internet.

One theory as to why September 11 has not had a bigger impact on international franchising is that the threat of terrorism and high levels of security are commonplace in many countries, and people have learned to carry on with their lives-just as Americans are now doing. Also, the world can readily see that Americans will not be defeated by terrorists and that, if anything, our resolve to preserve our way of life has been strengthened.

The bigger criteria for a decision to expand internationally should be your assessment of the economies in those countries that you have targeted. While the long-term (15-year) predications are for global economic growth to return to the high levels of the 1960s and early '70s, the benefits of this growth will not be universal. It is now more important than ever to carefully examine all opportunities and develop a business plan for international expansion that proactively targets those countries offering the greatest potential and avoids the temptation to respond to every inquiry-whether or not it fits into the plan.

Michael H. Seid, founder and managing director of franchise advisory firm Michael H. Seid & Associates, has more than 20 years' experience as a senior operations and financial executive and a consultant for franchise, retail, restaurant and service companies. He is co-author of the bookFranchising for Dummiesand a former member of the International Franchise Association's Board of Directors and Executive Committee.
Kay Marie Ainsley, managing director of Michael H. Seid & Associates, consults with companies on the appropriateness of franchising; assists franchisors with systems, manuals and training programs; and is a frequent speaker and author of numerous articles on franchising.


The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Side Hustle He Started in His College Apartment Turned Into a $70,000-a-Month Income Stream — Then Earned Nearly $2 Million Last Year

Kyle Morrand and his college roommates loved playing retro video games — and the pastime would help launch his career.

Business News

New Southwest Airlines Major Investor Wants to Force Out CEO, Slams Company's 'Stubborn Unwillingness to Evolve'

Elliot Investment Management announced a $1.9 billion stake in the Dallas-based Southwest Airlines on Monday and is urging shareholders to vote for new leadership.

Science & Technology

Why We Shouldn't Fear AI in Education (and How to Use It Effectively)

Facing resistance to new technologies in the educational process is nothing new, and AI is no exception. Yet, this powerful tool is set to overcome these challenges and revolutionize education, preparing students and professionals for a future of unparalleled efficiency and personalized learning.

Business News

Elon Musk Threatens to Ban Employees from Using Apple Products, Says Will Lock Devices in 'Cages'

The Tesla founder sounded off on X following Apple's 2024 Worldwide Developer Conference on Monday.

Business News

Apple's AI Has a Catch — And It Could Help Boost Sales

Not every iPhone owner will get to use the new Apple Intelligence.

Business News

Y Combinator Helped Launch Reddit, Airbnb and Dropbox. Here's What I Learned From Its Free Startup School.

The famed startup accelerator offers a free course on building a business — and answers five pressing questions for founders.