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Fashion, apparel, textile, merchandising, garments

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454

  1. 1. <ul><li>FRANCHISING OPPORTUNITIES </li></ul><ul><li>ACROSS EUROPE </li></ul><ul><li>Mitchel Auerbach, Senior Commercial Officer </li></ul><ul><li>U.S. Commercial Service, Dublin, Ireland </li></ul><ul><li>Dillon Banerjee, Senior Commercial Officer </li></ul><ul><li>U.S. Commercial Service, Lisbon, Portugal </li></ul><ul><li>Trade Winds Forum </li></ul><ul><li>May 16, 2007 </li></ul>
  2. 2. OVERVIEW <ul><li>Franchising Today </li></ul><ul><li>International Franchising </li></ul><ul><li>Why Go International? Why Europe? </li></ul><ul><li>Franchising Across Europe </li></ul><ul><li>Legal Aspects of Franchising </li></ul>
  3. 3. OVERVIEW <ul><li>Market Entry Strategy </li></ul><ul><li>Our TOP TIPS </li></ul><ul><li>East Versus West </li></ul><ul><li>The Challenges </li></ul><ul><li>The Opportunities </li></ul><ul><li>Best Prospects </li></ul>
  4. 4. OVERVIEW <ul><li>Our Services </li></ul><ul><li>Export Success Stories – Ireland & Portugal </li></ul><ul><li>Franchising Shows & Trade Missions </li></ul><ul><li>Useful Websites & Contacts </li></ul>
  5. 5. Franchising Today: U.S. Facts and Figures <ul><li>$1.53 Trillion Dollars </li></ul><ul><li>Across 75 Industries </li></ul><ul><li>One in Seven Jobs </li></ul><ul><li>50% Retail Sales </li></ul>
  6. 6. Exponential Growth <ul><li>Growing Six Times Faster than U.S. Economy </li></ul><ul><li>900 New Concepts in last 3 years </li></ul><ul><li>Strongest Growth Sub-Sectors – automotive, construction, child-related, fitness, pet care, senior home care and business service franchises. </li></ul><ul><li>Future Growth Areas – Health & Beauty, Lifestyle and Entertainment franchise offerings. </li></ul>
  7. 7. Franchising in the U.S. 1997 to 2007 $1.53 trillion 50% 767,000 18 million $250 billion 30% 450,000 4 million Sales Revenue % Retail Sales Network Units Number Employed 2007 1977
  8. 8. International Franchising <ul><li>U.S. Franchisors lead on International Expansion </li></ul><ul><li>20% of all American franchisors “go global” </li></ul><ul><li>Half of all units established are outside the U.S. </li></ul><ul><li>Additional 100 Expand Across Borders Every Year </li></ul>25,000 6,000 1,300 700 7-Eleven Subway UPS/Mail Boxes Etc. InterContinental Hotels
  9. 9. Why Go International? <ul><li>Fast & Efficient Growth Expansion Strategy </li></ul><ul><li>International Demand for Products and Services </li></ul><ul><li>Enhance Reputation & Credibility In Domestic Market </li></ul><ul><li>Become a Multicultural Organization </li></ul><ul><li>Contribute to Economic Development in Foreign Countries </li></ul>
  10. 10. Why Europe? <ul><li>Market Size – 728m Consumers! </li></ul><ul><li>Growing Demand for High Quality Products and Services </li></ul><ul><li>Mix of Mature & Developing Markets </li></ul><ul><li>Demographics & Diversity of Cultures </li></ul><ul><li>Development of Retail Infrastructure </li></ul><ul><li>Availability of Local Finance </li></ul>
  11. 11. European Franchising Marketplace <ul><li>7,000 Franchise Systems </li></ul><ul><li>With 250,643 Units </li></ul><ul><li>85% of Franchise Concepts are Indigenous </li></ul><ul><li>Growth - 33% over last 10 years. </li></ul><ul><li>Source: European Franchise Federation Survey 2004 </li></ul>
  12. 12. America’s Top Franchises In Europe Source: www.franchisedirect.com ERA Real Estate 41 Subway 38 UPS Store/Mail Boxes Etc. 37 KFC 35 Century 21 31 ChemDry 27 Pizza Hut 25 Sylvan 18 Novus 16 Remax Int’l Inc 8 Burger King 3 McDonalds 1 Company Ranking
  13. 13. D evelopment of Franchising By Country Source: U.S. Commercial Service 2007
  14. 14. Franchising Across Europe Source: EEF - 2004 <ul><li>Germany and UK lead on number of Domestic Systems followed by France, Italy and the Netherlands </li></ul><ul><li>Lead Exporters of Indigenous Brands – France, Germany, UK </li></ul><ul><li>Lead Importers of Foreign Brands – Denmark, Belgium, Austria </li></ul><ul><li>Highest Growth Markets include – Sweden, Hungary, Spain, Netherlands and Ireland. </li></ul><ul><li>Greatest turnover recorded by Germany and the UK </li></ul>
  15. 15. Impact of American Franchises in Europe Source: U.S. Commercial Service - 2007
  16. 16. Legal Aspects of Franchising Country Specific Laws <ul><li>France – Statutory Disclosure Requirement </li></ul><ul><li>Italy – Franchise Law 2004 </li></ul><ul><li>Lithuania – Statutory Franchise Regulation 2000 </li></ul><ul><li>Romania – Law regarding the legal status of a Franchise </li></ul><ul><li>Spain – Specific Disclosure and Registration Legislation </li></ul>
  17. 17. Legal Aspects of Franchising Other Important Considerations <ul><li>Check out Country-specific Laws by Industry Sector </li></ul><ul><li>Germany – High Degree of Protection </li></ul><ul><li>Poland – Polish Civil Code </li></ul><ul><li>Greece – Lack of clarity (use of land & buildings) </li></ul><ul><li>Belgium – New Franchise Law under consideration </li></ul><ul><li>Disclosure & Relationship Laws – Albania, Georgia, Moldova and Romania </li></ul><ul><li>Relationship Law – Belarus, Russia and Ukraine </li></ul>
  18. 18. Take a Strategic Approach Where to Go? <ul><li>Establish Market Demand </li></ul><ul><li>Development of Franchising & supply of Franchise Investors </li></ul><ul><li>Economic, Political & Commercial Assessment – GlobalVue </li></ul><ul><li>Degree of Cultural Diversity & Language Differences </li></ul><ul><li>Ease of Travel </li></ul><ul><li>Banking System – Availability of local Finance </li></ul><ul><li>Communications & Technology </li></ul><ul><li>Competition – Where are your competitors going? </li></ul><ul><li>Franchising QuickTake! </li></ul><ul><li>How to entry Europe? </li></ul>
  19. 19. Market Entry Strategy <ul><li>Master License, Area Developer or Regional Developer, Multiple/Single Units? </li></ul><ul><li>Geography, market, product/service and resource issues </li></ul><ul><li>Nuances of Individual Countries </li></ul><ul><li>Seek Advice – local Franchise Associations </li></ul><ul><li>Pilot Units – a Recipe for Success </li></ul>
  20. 20. TOP TIPS <ul><li>Adapt to Local Market </li></ul><ul><li>Invest in Market Research </li></ul><ul><li>Test Transferability & Receptivity </li></ul><ul><li>Invest in Pilot Project </li></ul><ul><li>Protect Trademarks </li></ul><ul><li>Refine Candidate Profile </li></ul>
  21. 21. TOP TIPS <ul><li>Internationalize Materials </li></ul><ul><li>International Webpage </li></ul><ul><li>Formulate Realistic Fees </li></ul><ul><li>Encourage Prospects to talk to Franchisees </li></ul><ul><li>Conduct Due Diligence on Prospects </li></ul><ul><li>Devise Realistic Development Schedule </li></ul><ul><li>Hire Translators </li></ul>
  22. 22. TOP CONSIDERATIONS: Cultural & Business Differences <ul><li>Introduction to signing. </li></ul><ul><li>Don’t frighten prospects away. </li></ul><ul><li>Time for a sandwich? </li></ul><ul><li>Don’t rush things. </li></ul><ul><li>Their email must be down! </li></ul>
  23. 23. THE CHALLENGES Barriers to Franchise Entry in Europe Source: NatWest Bank
  24. 24. EAST VERSUS WEST: Challenges in the EAST <ul><li>Relatively smaller markets </li></ul><ul><li>Royalties higher than competitors </li></ul><ul><li>Actual and psychological distance </li></ul><ul><li>Availability of real estate </li></ul><ul><li>Lack of brand awareness </li></ul><ul><li>Experience required! </li></ul>
  25. 25. EAST VERSUS WEST: Challenges in the WEST <ul><li>Difficult to obtain operating licenses </li></ul><ul><li>High cost of real estate </li></ul><ul><li>Local regulations can be strict </li></ul><ul><li>Entrepreneurial culture </li></ul><ul><li>Finding the right partner! </li></ul>
  26. 26. LEVEL OF OPPORTUNITY Source: U.S. Commercial Service 2007 <ul><li>GOOD </li></ul><ul><li>Austria, Belgium, France, Germany, Slovakia, Spain, Sweden, Switzerland, United Kingdom. </li></ul><ul><li>VERY GOOD </li></ul><ul><li>Greece, Portugal, Romania, Serbia. </li></ul><ul><li>HIGH </li></ul><ul><li>Finland, Ireland, Turkey </li></ul>
  27. 27. BEST PROSPECTS Source: U.S. Commercial Service 2007 1 Entertainment 2 Interior Design, Laundry/Dry Cleaning, Recruitment,Security & Environment 3 Training Services, Express Delivery 4 Automotive, Hotel, Travel & Car Rental 5 Apparel/Fashion 6 Health & Fitness, Cleaning, Maintenance 7 Real Estate, Senior Home Care, Children/Education 8 Beauty & Personal Care 10 Business Services 12 Food/Restaurant No. of Countries Sector
  28. 28. Our Customized Services <ul><li>Expert counseling for new to mature franchisors </li></ul><ul><li>QuickTake for Europe! </li></ul><ul><li>Franchising Gold Key </li></ul><ul><li>Single Company Promotions </li></ul><ul><li>Business Facilitation Services </li></ul><ul><li>Trade Missions </li></ul><ul><li>USA Pavilions at International Shows </li></ul><ul><li>Counseling & Matchmaking at Domestic Shows </li></ul><ul><li>Introductions to Local Franchise Associations </li></ul><ul><li>Webinars on International Market Opportunities </li></ul><ul><li>Regional Education & Development Conferences </li></ul>
  29. 29. EXPORT SUCCESS STORY PORTUGAL <ul><li>In 2005, awarded a Master Franchise for Portugal </li></ul><ul><li>Initially planned to open 30 units in Portugal by the end of 2004 and 20 more in subsequent years. </li></ul><ul><li>As of April 2007, 54 units already opened. </li></ul>
  30. 30. PORTUGAL SNAPSHOT <ul><li>3% share of GDP </li></ul><ul><li>1.2 % of total national employment </li></ul><ul><li>63,000 jobs generated </li></ul><ul><li>4,100 new jobs in 2006 </li></ul><ul><li>900 new units </li></ul><ul><li>10,700 total units </li></ul>2006 IIF – Franchising by Country
  31. 31. EXPORT SUCCESS STORY IRELAND
  32. 32. Franchising Shows & Trade Missions <ul><li>September 2007 – Russia </li></ul><ul><li>October 2007 - Italy, Ireland, & United Kingdom </li></ul><ul><li>November 2007 – Ireland </li></ul><ul><li>March 2008 – France, Greece & India </li></ul><ul><li>May 2008 – Australia </li></ul><ul><li>October 2008 – Asia </li></ul>
  33. 33. Websites <ul><li>Franchising E-Market Express </li></ul><ul><li>www.buyusa.gov/eme/franchising.html </li></ul><ul><li>European Franchising Federation </li></ul><ul><li>www.eff-franchise.com </li></ul><ul><li>International Franchise Association </li></ul><ul><li>www.franchise.org </li></ul><ul><li>European Franchising Network (legal support) </li></ul><ul><li>www.europeanfranchising.com </li></ul>
  34. 34. Contacts Finola Cunningham Team Leader, Global Franchising Team U.S. Commercial Service, Dublin, Ireland Tel: +353-1-667-4753 Email: Finola.Cunningham@mail.doc.gov
  35. 35. <ul><li>THANK YOU! </li></ul>

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