Go West Young Franchisor... International is the place to be Howard Bassuk You’re right. I must be crazy. There I was, having been married for only a few days, visiting some of the most exotic and interesting places in the world, and what was I thinking? You’d think it would have been sufficient to limit my thoughts to marveling at the fabulous and unique sights that I was being treated to. You’d think that the last thing that would be crossing my mind would be anything that had to do with franchises. Someone should have smacked me and told me to wake up! What was wrong with me? Why would any person in his right mind think about franchises and franchising amidst such breathtaking beauty? None the less, as I visited some of the most famous and beautiful spots in the world, I found myself wondering about franchises. I must admit that to some degree my thoughts were thrust upon me by the abundance of American franchises that already dominate some of these pristine landscapes. It just seemed so obvious, and so glaring. I kept thinking to myself, “boy, oh boy, are these places perfect for franchises!” McDonalds, 7-Eleven, Pizza Hut, and other American franchise icons have become dominant in these overseas locales. Naturally, I began to wonder whether these countries would soon get many of the rest of the services and products that they needed from franchises, just as we do here in the United States. I began to turn over the possibilities in my mind. They seemed endless, and all of them seemed to have room to grow. The list was broad, and included more food concepts, as well as everything from automobile transmission services and tune ups, to dry-cleaning and shoe repair. I felt almost as if I was caught in a time warp. Many of the franchise companies that became prominent in the United States 15 to 30 years ago seem to be repeating their process overseas now. Many more have not yet tried. I kept thinking about what a great time, and a great window of opportunity it might be for the rest of these franchises companies that either haven’t yet tried to expand internationally, or for those that have grown up more recently and are just starting to spread their wings. Upon reflection, I guess I shouldn’t be surprised. I believe that what sets Americans apart from others in the world is our unique ability and desire to both seek out, and take advantage of opportunity. Our country, grew up with that as one of our dearest and most treasured institutions and values. America, is after all, still known throughout the world as “the land of opportunity”. You probably remember your high school days, and the famous quote from Horace Greeley: “Go West, young man,” it trumpeted. Millions of our forefathers took his advice, and set out to expand their economic and personal frontiers. They sought new venues for fame, fortune and freedom. Often, they did so at great peril to themselves and their loved ones. Inexorably over time, despite the hardships America was pushed westward, until only the Pacific Ocean itself could stop our advance. If you stop for just a moment, and consider what Greeley was saying, you soon realize that his comments then, are equally true today. In the mid 1800’s they were part of a roadmap that pointed the way to success for the countless American pioneers that took them to heart. Today, the direction on the map may have changed, but the idea has not. Opportunity still abounds if we are willing to explore new frontiers! In the 18th and 19th century, America was not the economic dynamo that it is today. We were a wide open society, with less proven success than many other older, more established countries. The “finer” things in life that we craved, were often those that we copied and/or imported, not those we created or invented ourselves. By the mid 20th century, and particularly after World War II, all of that had changed. We had become the world leaders. America was the world’s icon for success, and our institutions showed others how that success could be achieved. When World War II ended, amongst the industrialized nations, only America’s industrial infrastructure was still largely intact. In fact, we were so economically dominant, that the United States accounted for a stunning 75% of the world’s GNP. Other countries either needed to be rebuilt, or were still emerging economically. That left us in a unique position. We had both a unique pioneering spirit of innovation and a head start over the rest of the world! While others were either trying to rebuild or grow, we were reinforcing, refining, perfecting, and institutionalizing. In the post war boom, we provided world leadership, not just by our ideals and our industry, but by our ideas and innovations as well. We were once again establishing new frontiers, this time not geographic, but economic and cultural. Supermarkets, freeways, suburbs, and fast food became integral parts of the way we lived our lives. Prosperity, convenience, and a desire to have the products and services that would help us to live our lives better, became part of the American landscape. Regional differences, from cooking styles to cleaning methods, melted away and were replaced by a national homogenization that allowed us to find products and services we were familiar with, and which we trusted, no matter where we went. As I walked down the streets of several European capitals, one fact seemed inescapably clear. Whether it is London, or Copenhagen, or Los Angeles, there is an unmistakable sameness to many of the services that people are choosing. The phenomenon that swept the United States 20-30 years ago and resulted in the diminishment of regional differences, is now repeating itself throughout the rest of the world. I was repeatedly struck by what seemed to me to be a retrospective view of the United States, and how our service economy has evolved. It seems to me that many of the cities and countries that I visited are a lot like the US some time ago. While some, including myself, see this as a mixed blessing, people seem to repeatedly opt for convenience and consistency over uniqueness. Sometimes, this happens at the expense of quaint local establishments that are wonderful and surpass expectations, but too often they fall short, and are vulnerable to change. It appears to me that this dynamic is at work almost everywhere in the world. While it is a decade or two behind our own pace, it unquestionably is taking hold more and more. This means that American Franchisors and the astute investor may have a worldwide opportunity that is beckoning. When, last month, I visited London, it was the first time in almost 20 years. In that time McDonalds, had supplanted Wimpy’s, and American fast food was everywhere. Supermarkets had replaced the corner grocer, and 7-Eleven’s provided convenience for our quickie needs. Sounds familiar doesn’t it? I was told that to dry clean a suit cost about 9 pounds (approximately $14.50 US) unless you took it to a fancy dry cleaner, and then it would be more. But pick up and delivery was included in the service. It sounded exactly like the dry cleaners that existed when I was a child. Over and over, I saw the similarities between the US years ago, and these cities now. Certainly there are cultural differences, lifestyle variations and varying tastes, and not all concepts will transfer well from country to country. But even clearer was the fact that the similarities far out distanced the differences. Young people, wearing their designer jeans, and logo’d shirts walked down the streets holding their soda cups from a fast food restaurant. If not for the sometime different languages, and the strikingly different architecture of these cities, it could have been any American city! How many times have we said to ourselves, that we would have loved to know 10 years ago, what we know today? Think of the decisions we could make, and the investments we would choose. To me, that appears to be the opportunity for international expansion in franchising. Although this trip was to Europe, the point is valid anywhere. The direction need not be west. It could be east, west, north or south. Everywhere we look there is opportunity. It doesn’t matter whether the places, like London and Copenhagen are economically on a par with cities in the USA, or whether they’re newly awakened capitalist bastions like St. Petersburg (in Russia), Tallinn (in the Baltic Republic of Estonia), or a nation in Asia or Africa. As I was able to see on my recent trip, they all would be perfect for more and different franchises. Maybe some countries would be more receptive to food concepts, and others might be perfectly positioned for a revolution in the way services are provided, or perhaps both. What is very apparent is that there is both need, and opportunity to do overseas, what has been so successfully done here. Perhaps the most compelling factor in franchising’s appeal throughout the world, is that cutting edge technologies, and cutting edge systems for providing services, can leap frog technologies. This means that even the most backward society can get access to the latest ideas, and start with a fully evolved concept. There’s no need to wait for someone to invent drive through windows, or point of sale accounting systems...they’re already here. And, oh yes...there’s another advantage...experience. We can look at the types of businesses that successfully evolved here in the USA, and at the kinds that didn’t, and perhaps avoid making costly mistakes. More and more franchisors and investors are seizing this opportunity. More and more will follow. Some franchisors have even focused most of their early efforts on international growth, rather than the more traditional domestic expansion. These franchisors have told me that overseas there is a larger market, and fewer competitors, so the conditions are ideal. However, like all things that sound really good, international growth is not without its challenges. Communications from long distance is far more difficult than it is domestically. The internet offers significant benefits in this area, but time differences alone, can make communication hard. On top of that, there are cultural differences, language differences, and legal differences. Growing a business in another country can be tricky. So, if you do want to invest in the international marketplace, make sure that the locale you choose can support the product that you are offering. We should also be sure to keep in mind that some of the things we take for granted here in the United States, might not be available in another country. Items like phone service, and mail delivery, are not universally consistent yet. Be aware that if your business could be negatively impacted by the lack of the support services you need, the timing may still not be right for you to introduce a particular franchise concept to the market you are targeting. What should you gather from all of this? Simply this: Opportunity for franchisors, and investors is abundant. Taking full advantage of these opportunities may require that you be willing to once again blaze new frontiers, but the frontiers are plentiful. So, go west, or east, or north, or south, but don’t be afraid to go. As one motivational slogan proclaims, “You can’t discover new horizons if you’re afraid of losing sight of the shore.” Bon Voyage!