Franchising expo branches out

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Hopeful business owners from around the world descended on the annual International Franchise Expo in Washington over the weekend, looking for a sandwich, pizza or storage franchise for their home countries.

Forty delegations from nations including Russia, Morocco and the Philippines attended the expo at the Washington Convention Center.

When the franchise show was in its infancy in 1992, 5 percent of attendees and potential franchise owners were from abroad, said Philip Zeidman, a franchising lawyer and a member of the general council of the International Franchise Association, the show's sponsor. Now he estimates that more than 25 percent of potential investors are international.

"The great growth in franchising is international," not domestic, Mr. Zeidman said. "The international market is the trajectory."

"My dad is looking for a franchise," said Vanessa Cure of Barranquilla, Colombia, while looking through the exhibition hall for a potential franchise match. "Colombia is a place we could take many franchises. It's an appropriate place for this kind of business."

China, for example, has 109 cities of 1 million people or more and great potential for new franchises, Mr. Zeidman said. The U.S. has fewer markets of that size and already is relatively saturated with franchises from McDonald's to Radio Shack.

Franchises account for one of seven private-sector jobs in the U.S. and for 50 percent of all retail sales in the U.S., according to the International Franchise Association Educational Foundation.

Unlike an investor in the United States, the typical international investor often is looking to make a larger investment and is interested in owning the rights to a franchise in an entire country.

A potential international investor, already a franchiser in his native country, often will decide to become a franchiser for a U.S. brand. He becomes a "master franchiser" for the U.S. company, owning exclusive rights to develop that brand in the country or region, Mr. Zeidman said.

It is vital for international delegations to select a brand that will "fit in their culture," said Matthew Shay, president of the International Franchise Association.

The expo is the first step in that process, said Terry Hill, spokeswoman for the association.

"This is where potential franchise investors can come and get a closer look at these companies," Ms. Hill said.

Nigeria has become "ready for franchising," said Anayo Agu, a Commerce Department trade specialist working with the Nigerian delegation.

"In Nigeria, they are looking for opportunities to buy a franchise and begin the process," Mr. Agu said. A negative perception of the business environment in Nigeria was a barrier to business six years ago, he said, but no longer.