There are a lot of brands pondering international growth, and scholars say the U.K. and China are especially attractive depending on the goals.
In the most recent filing of the Rosenberg International Franchise Center (RIFC), both countries rose to the top, but for very different reasons.
According to the RIFC, the U.K. is best positioned for brands that want what it calls “balanced growth.” It has a large market potential based on the local economy and GDP growth and consumers have plenty of purchasing power, which means low market risk. The U.K., is very close culturally to the U.S. According to the World Bank’s Ease of Doing Business Index, doing business in the U.K. isn’t nearly as risky as other countries. And even with Brexit as major unknown factor in the economy, Euromoney’s Country Risk Index shows that regulatory risks are still fairly low—second only to South Korea.
Rounding out the rest of the top five most attractive countries for balanced growth for many of the same reasons is Germany, Canada, Australia and France.
For what the RIFC calls “aggressive growth” look no further than China. It has a massive population, explosive economic growth and as shown in the International Monetary Fund’s World Economic Outlook, it has the strongest market potential of any country.
Of course it can be tricky, China is very different culturally, which is why it’s mostly legacy players with strong brand affinity like Yum and well-known international brands like Starbucks that are rushing headlong into the country. They also happen to have the legal bench necessary for what the World Bank lists as one of the riskiest countries when it comes to legal and regulatory risks—second only to India in the RIFC rankings.
Other options for aggressive international growth brands are Turkey, Germany, the United Kingdom and India.
Identifying the market, however, is just the first step as Shaun Grove, president of Club Pilates said.
“It’s difficult, for us and for most, you do it as a master franchisor relationship. So you’re really looking for someone who has all the things you have in yourself to replicate that tin their country,” said Grove.
See the rest of the top ten countries for balanced and aggressive international growth at the RIFC website.
Source: Franchise Times