INTERNATIONAL  EXPANSION  STRATEGIES  –  IDENTIFYING  MARKET  OPPORTUNITIES  

•  William  Edwards  –  CEO  of  Edwards  Global  Services,  Inc.  

•  Mike  Powers  -­‐  Execu<ve  Vice  President  -­‐  Business  Development,  Smoothie  King  Franchises,  Inc.  

•  David  Ramadan  -­‐  Founder  &  President  of  RAMA  Interna<onal  Inc  

WHAT  WE  WILL  COVER  TODAY  

•  Resources  for  interna<onal  expansion  of  your  franchise  brand  

•  Considera<ons  before  entering  a  specific  market  

•  Where  are  the  hot  markets  for  your  brand  •  Iden<fying  the  poten<al  •  Case  studies  of  successful  expansion  efforts    

INTERNATIONAL  AS  A  GROWTH  STRATEGY  

Based  on  working  with  40+  US  franchises  ‘Going  Global’:  

•  Interna<onal  Business  Development  should  be  treated  as  a  long-­‐term  strategic  decision  requiring  planning  and  focused  resources  

•  Interna<onal  Business  Development  requires  an  organiza1onal  commitment  –  from  the  top  down  

•  Interna1onal  Business  Development  is  NOT  a  short  term  source  of  ini1al  fees….there  are  associated  expenses  

2011 MARKET  RANKINGS  

GlobalVue™  -­‐  copyright  2011  by  EGS   Rankings: 1 is Best, 4 is Worst  

Expected Market Legal Ease Of Legal Political OverallCountry/Region 2011 GDP Size Concerns Market Concerns Risk Ranking

Growth (Customers) Entry (Stability)

Brazil 1 1 2 2 2 1 1.5Hong Kong 1 4 1 2 1 1 1.7Saudi Arabia 1 2 2 2 2 1 1.7Singapore 1 4 1 2 1 1 1.7Urban China 1 1 2 2 2 2 1.7India 1 1 2 3 2 2 1.8Indonesia 1 1 3 2 2 2 1.8Viet Nam 1 2 2 1 3 2 1.8Australia 2 2 2 3 1 1 1.8Colombia 2 2 2 2 2 1 1.8South Africa 2 2 2 1 2 2 1.8Mexico 2 1 2 2 2 3 2.0South Korea 2 2 3 2 3 2 2.3Middle East Region/GCC 2 2 2 2 2 2 2.0Poland 2 2 3 2 2 2 2.2Philippines 2 2 2 2 2 3 2.2Malaysia 2 2 3 3 3 2 2.5Russia (net of oil) 3 2 4 3 3 3 3.0USA 3 1 2 1 1 1 1.5Japan 3 1 2 2 1 1 1.7United Kingdom 3 1 2 2 1 1 1.7Canada 3 2 2 2 1 1 1.8Germany 3 1 2 3 1 1 1.8Spain 4 1 2 2 1 1 1.8Ireland 4 4 1 2 1 1 2.2Italy 4 2 2 2 2 1 2.2

Based on a survey of 40 franchise professionals in 25 countries

Most Desired Franchise Type By Country ‘1’ Is Highest Desire, ‘4’ Is Lowest Desire

HOT  INTERNATIONAL  FRANCHISE  SECTORS    

•  AutomoZve  –  A[er  market  products  and  services  

•  Children’s  EducaZon  –  At  all  levels  

•  Personal  Services  –  Handyman,  maid,  mobile  

•  Specialty  Retail  –  To  fill  large  malls  in  emerging  markets  

•  Specialty  Food  –  Mall  anchor  concepts,  theme  brands,  ethnic  foods,  well  known  pizza  brands  and  well  known  dessert  brands  

HOT  FRANCHISE  MARKETS  FOR  2011    

                 •  Brazil  –  Proven  foreign  franchises  

 •  China  –  Focused  on  1st  and  2nd  Tier  CiZes    

 •  India  –  Strong  desire  for  food  and  retail  brands  

 •  The  Middle  East  –  specialty  food,  retail,  personal  service  

 •  S.E.  Asia  –  Indonesia,  Malaysia  –  special  niche  brands  

 •  South  Africa  –  Food  and  service  

 •  Viet  Nam  –  Food  and  educaZon  

 •  Colombia  –  Food  

David  Ramadan,  MA  

Founder  &  President  of  RAMA  Interna<onal,  Inc.  

Interna<onal  Licensee  For  Curves  

CONSIDERATIONS  FOR  ENTERING    THE  MIDDLE  EAST  &  INDIA:    

•  Commitment  to  the  Market  •  Key  Person  w/Cultural  Knowledge  •  Defined  Goals  &  ExpectaZons:  based  on  a  realisZc  business  plan  

•  Defined  Model(s):  Master  Franchisor;  Master  Franchisee;  or  Area  Developers  

•  A  long  term  budget  

•  PaZence  and  Posturing  

HOT  MARKETS:  INDIA  &  MIDDLE  EAST    

CASE  STUDY:  Curves  for  Women  

 Curves  India:  www.Curves.in     Curves  Middle  East:  www.CurvesME.com    

Michael  Powers,  CFE  

ExecuZve  Vice  President/  Business  Development  

SMOOTHIE  KING®  FRANCHISES  

 INTERNATIONAL  EXPANSION  

•  Human  Resources  – Legal  (internal  &  outsourced)  – Distribu<on/Logis<cs  – Development  (planning)  &  Design  – Dedicated  opera<ons  (R&D,  Openers,  BC,  Culture)  – Marke<ng  (integra<on)  

INTERNATIONAL  EXPANSION  

•  Capital  Resources  – Proper  planning  and  es<mates  

– PuXng  a  fair  value  on  the  territory  to  cover  ramp  up  period  

– Break  even  (Franchisor  &  Master)  – Travel  &  Economies  of  Scale  – Tax  planning  

CONSIDERATIONS  -­‐  SOUTH  KOREA  

•  Total  Investment  Dynamics  – Alignment  w/  Master  on  strategy  

•  Real  Estate  (Key  $,  Premium  Rates)  

•  Weather  

•  Language  •  Du<es  &  Taxes  •  Currency  Exchange    

SMOOTHIE  KING®  KOREA  

•  Launched  in  early  2003  •  3  FLAGSHIP  stores  by  mid  2004  

•  8  stores  by  end  of  2005  Break-­‐even  

•  More  PREMIUM  loca<ons  added  

•  Began  Franchising  in  2006  •  2010  YTD  –  79  loca<ons  (35  franchised)  

4  KEYS  TO  GLOBAL  SUCCESS:    BASED  ON  HARD  LEARNED  &  EARNED  LESSONS  

•  InternaZonal  development  is  a  strategic  business  direcZon  for  a  franchisor,  not  a  short  term  source  of  iniZal  license  fees  

•  Your  internaZonal  business  model  must  have  clear  differenZaZon  in  the  market  place  

•  Select  countries  where  you  have  a  good  chance  of  making  a  good  rate  of  return  

•  Take  Zme  to  find,  fully  evaluate  and  sign  the  right  master  franchisees