Five Tips from the 2019 New York International Franchise Convention
Recently we were lucky enough to attend the 2019 International Franchise Expo in New York City. Held by the International Franchise Association, the Expo is a massive event which attracted over 12,000 attendees and hundreds of brands.
The Expo is a truly international event with over 40 non-US franchise concepts displaying their offerings. Whilst the information available to attendees was almost overwhelming, there was a definite theme that ran through the event and come away with a new awareness of the state of the international franchise market and the opportunities that are available.
Five of the main takeaways from the Expo are as follows:
- The international franchise market is big! While this may not surprise anyone, what became apparent during the expo is the amount of international communication and multi-national franchise development happening in the industry. A number of franchise brands were seeking expansion across a number of countries, and were actively recruiting master franchisees or territory developers in a number of markets.
- With developments in technology, communication across countries is easier than ever in 2019. Franchise brands are leveraging this to make the management of international expansion simpler and more efficient. Whereas previously international franchise brands required complex and expensive communications and technology systems to communicate and keep track of their international offices and franchisees, the introduction of cloud-based systems has made things a whole lot easier. Companies like Salesforce and Facebook (through its Facebook Workplace platform) offer affordable and efficient systems to communicate with and support franchise partners and customers internationally, and the number of players in this technology space is expanding by the day.
- While the US has always been a lucrative market, lower barriers to entry has made it more attractive than ever for Australian franchise brands looking to widen their market. Whilst the cost of producing compliant franchise documentation (the Franchise Disclosure Document or FDD) remains relatively high when compared to Australia many local US law firms specialising in franchising are prepared to negotiate to secure Australian brands as they see the potential of securing long term clients. We have been lucky enough to have been asked by some of our Australian franchise clients to assist in their expansion into the US, and have developed relationships with local US law firms to produce and register FDDs (which can be used across a all US States through the use of schedules) at a relatively reasonable cost.
- The opportunities for Australian companies to secure the master franchises of international brands are there, but you have to work at it. Unfortunately, Australia remains a market that flies under the radar of many international franchise brands. It’s not that they don’t know Australia, just that the distance and population often see it placed down the priority list of countries franchise brands are targeting. Australian’s looking for potential franchise brands to bring to Australia need to put in the work. From our observations, this is much more than simply replying to a website contact page or emailing head office. It requires a positive effort to engage with the brand and its people. Our advice to anyone looking to secure franchise rights would be to physically visit head office (whether located in the US or another country) to get a feel for the brand and to display your qualifications and experience first-hand to decision makers.
- Everything is negotiable. While securing an Australian master franchise from an overseas brand may require a bit more work than normal, once the brand is comfortable with you and are happy to appoint you as a master franchisee or area developer, the opportunity to negotiate attractive terms is great. One of the trade-offs of having a relative lack of understanding of the Australian market is that local companies can often secure incredible deals. From wide territories to attractive payment terms, we have found that the international franchise brands we have helped enter the Australian market have been overwhelmingly reasonable in the terms they offer qualified master franchisee prospects.
The 2019 New York International Franchise Expo was an impressive showcase of franchise opportunities. For Australian franchise brands looking to expand overseas the event would have proved inspirational. For those thinking about securing rights to bring an overseas franchise brand into Australia, the breadth of opportunity would have proved almost overwhelming.