Franchising Rides Wave of Economic Expansion in Asia and Pacific Rim
If one works for a franchise system that either is franchising internationally or which is planning international franchise expansion, he undoubtedly has been evaluating opportunities and where to place the company’s development resources. Unless that person has been living under a rock, he must have considered, at least in passing, the attractions of the economically-talented Chinese and Indian markets, each with a population of more than one billion people. The Japanese economy has had its problems, but that it has embraced franchising since the 1970s. A franchise system may have considered franchising in Australia or New Zealand, countries with a language and legal system similar to that in the United States.
While everybody is talking about opportunities in the region, are any franchise companies able to go there and operate profitably? Do countries in the region have a pool of qualified prospective franchisees? Do enough people have the purchasing power needed to make a franchise program successful? Does anyone there really understand franchising? Can franchising operate under the laws of these different countries?
An Appetite for Franchising
Many franchise companies have had these questions and they are not alone. In the paragraphs that follow, some of these questions will be answered and others will be raised. But a review of the newly-published Asia Pacific Franchise Directory 2006 leads to an unmistakable answer: hundreds of franchise systems, most of them native to the region, have sprung up, grown networks, formed associations and are granting franchises in their own and neighboring countries, while many American franchise companies sit on the sidelines pondering the potential.
Global franchising consultants, including William Le Sante, CFE, of Le Sante International, who chairs the International Franchise Association’s GLOMAK Committee, are very positive about opportunities for franchising in the region. Le Sante has visited the region with several clients recently, and has concluded, from visits to exhibitions and meetings with local franchise associations, that the Asian Pacific markets are getting ready to take off. Besides the oft-mentioned gold mines of China and India, he is very enthusiastic about opportunities for western franchise companies in Vietnam. Yes, the same country that humbled the United States in the 1970s and ran the capitalists out of the country or into re-education camps. Today, Vietnam is one of the most aggressive trading partners of the United States.
Between February and December of 2006, businesses in Thailand, Taiwan, Tokyo, Beijing, Shanghai, Guangzhou, Brisbane, Sydney, Seoul, Ho Chi Minh City, Hong Kong, Kuwait, Malaysia, Singapore, Indonesia and New Delhi expressed an interest in franchising. The region is ready for franchising, according to Asiawide Franchise Consultants Pte Ltd.
Another telling sign about this region’s appetite for franchising is that within a period of four years, India now has two franchise magazines and many more franchising events. There were several franchising events within the last 24 months in Vietnam, coupled with two books on franchising written by the owner of a local noodle franchise chain. Indonesia now has three franchise shows a year, and a local franchise magazine is thriving. Despite its internal challenges, the Thai government still allocates funds generously via the Department of Export Promotion agency for Thai franchises to participate in international expositions. Government departments, associations and other institutions in Australia, China, Malaysia, Singapore, Thailand, Taiwan and Vietnam are conducting certificate and diploma level courses to educate more personnel and prepare the ground for the upsurge of human resource demand in the market. In fact, China has established an international franchise academy based in Zhuhai (Guangdong) in partnership with the renowned Beijing Normal University. This tertiary institution will award its first bachelor’s degrees this month.
Government and Economic Factors Foster Franchising
Even when tensions arise in franchise relationships, governments are getting involved. The Korean government has spent millions of dollars on mediation sessions between feuding franchise systems and franchisees. The Singapore and Malaysian governments are still generously supporting, with grants, “deserving and eligible” companies to expand their business via franchising.
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