A World of Success for the Franchise Industry

Today's global marketplace depends in large part on the franchising industry, which gives consumers the comfort and reliability of a store brand they know and are familiar with. The economic contribution of franchises in the United States is equal to around 4$ of the economy - about $835 billion a year. More than 9.5 million people hold jobs in franchised businesses, and next year economists predict that the franchise industry will contribute more than $2 trillion to the U.S. economy.

Franchises are directly responsible for distributing products to consumers worldwide, and the industry has grown extensively over the last few decades. In 1007, the International Franchise Association's International Committee conducted a survey that showed that nearly 2/3 of its members currently have operations in international locations, and almost 75% said that they were planning to start or ramp up their international operations. The areas that are most often the target of U.S. franchise operations are the Middle East, Western Europe, Eastern Europe, and South and Central America. And thanks to regulatory changes established by the Federal Trade Commission, it is now easier and less expensive for franchises based outside the United States to enter the market domestically.

Although franchises are typically associated with the United States marketplace, the basic business model has been incorporated around the world, and now there are many major franchise operations that are not based in the United States. In fact, almost 15% of the franchises listed in the Top 100 Global Franchises list compiled by Franchise Direct are not based in the United States. For example, the Kumon company that manufactures and distributes children's educational products is based in Japan. NaturHouse is a Spanish nutrition and health franchise, Expense Reduction Analysts is a consulting franchise based in the United Kingdom, and the printer cartridge refilling company, Cartridge World, is based in Australia.

Franchise Direct's list of the top 100 global franchises is dominated by the quick service restaurant (QSR) industry, which accounted for six of the top ten franchises and 20% of the total top 100 franchises. Even in the midst of the economic recession, the QSR industry has proven to be resilient and successful, and unlike many other businesses, fast-food restaurants are expected to continue growing in the coming years. Their convenience and budgetary value make it easier for consumer to manage their day-to-day living, and make it easier to have a dining out experience, which ensures that they will continue to patronize the restaurant.

Top global franchises have several things in common that contribute to their operational success. Strong brand names are recognized all around the world, and consumers associate that brand name and logo with products and services they know and trust. For example, McDonald's has more than 32,000 stores located in more than 60% of the countries around the world. Ronald McDonald and the Golden Arches have gained universal recognition among consumers. By the same token, Colonel Sanders and the KFC sign are recognized around the globe with more than 15,000 restaurants. Other franchises that enjoy strong brand recognition in clued 7-Eleven, Crowne Plaza, and Holiday Inn.

The top 10 global business franchises, according to Franchise Direct, are:

• McDonald's
• Subway
• 7-Eleven
• International Hotel Group Hotels
• Pizza Hut
• KFC
• Burger King
• A&W Restaurants
• Ace Hardware Corporation
• NaturHouse

The continual dismantling of barriers to international trade has resulted in the global economy being stronger and more diversified, and franchises can achieve economies of scale like never before. Leading franchises now have the resources they need to grow and spread into emerging markets. The top franchises around the world have proven their success in international expansion, mastering linguistic and business challenges, and adapting to cultural differences to help their businesses fit in seamlessly. The examples shown by today's leading franchise companies can provide a valuable example for smaller companies to use as a model to one day make their mark and rank among the top 100 franchises in the world.