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A Smaller World?

International attendance was up at this year’s IFA; here’s why


Published:

Dateline: San Antonio, Texas

From time to time, when writing from an International Franchise Association Convention, I have commented on the disappointingly low attendance from outside the United States, especially for representatives of other national franchise associations. What a difference I saw at this year’s 50th Annual Convention. Why the change?

The programming, which for several years has been trending inexorably toward those engaged in or considering cross-border franchising, may have reached something of a high watermark here. On the day prior to the convention’s opening, two full summits were devoted to international franchising—one for those considering and one for those already doing so. Throughout the convention, there were concurrent sessions of interest to this sector (for example, “Budgeting and Planning for International Expansion”). An entire “Track of the Business Solution Roundtables,” hosted by franchise executives, was designated “International,” with roundtables on both operational issues and geographic markets. The same approach was taken during the roundtables hosted by suppliers.

Perhaps the clearest tip of the hat to the changing face of franchising was the keynote address by “Global Guru” Dr. Jeffrey Rosensweig of Emory University, who specializes in international strategy, economics and finance. Rosensweig had addressed the IFA Board three years earlier on “Globalization And Demographic Changes: The Impact of IFA and Franchising,” and it seemed obvious that his observations merited a larger audience. He did not disappoint, with a virtuoso performance covering both growth markets and trouble spots around the world, and tracing the dramatic changes during the 50 years of IFA’s existence. Of special interest to policy makers (but routinely overlooked by them): While manufacturing (at the heart of the U.S. economy at the time of IFA’s founding) has dropped to 9 percent of our employment base (hence, the shift from a large trade surplus to a huge deficit), the growth in services has been astounding. Many of those services are exported, and franchising is an increasingly significant segment of those exported services.

Apart from educational programming, components of the Association and of the franchising community focused on international activity held concurrent meetings. Those included not only the International Committee and the Social Sector Committee (heavily slanted toward international models), but also the Educational Foundation (which gave its award for the research making the greatest contribution to a paper on “Franchising in Frontier Markets.” In addition, IFA hosted the semiannual meeting of the World Franchise Council, the umbrella organization comprised of representatives of franchise associations in 41 jurisdictions, representing more than 2.5 million outlets. During the convention it was reported that IFA will expand its international development program through its partnership with the U.S. Commercial Service, continue its participation in franchise expositions (this year, for example, in China and the Middle East) and co-host a U.S. pavilion in four expos around the world.



During IFA’s 50 years, the world has gotten smaller, but its delegations at IFA conventions have gotten larger.

 

The attendee roster reflected the nature of the program itself, with representatives from 26 countries. Australia alone sent a delegation of 40—more than the sum of all non-U.S. attendees at conventions not too many years ago. And even those figures understate the intentional composition, since many U.S. franchisors (including some of the largest) are or have been owned by non-U.S. interests.

Among the more interesting manifestations of this growth and the international focus of IFA was the presence at the board meeting of representatives of a number of bar associations—from the Americas, Europe, Asia, Australia and elsewhere. Their presentations provided a unique experience for many board members, and underscored the increasing interdependence of our societies. No one should be under the illusion that we have suddenly entered an era of uniform professionalism in the sister organizations. Too many are still run by consultants, or part-time personnel, or have little to no staff or other resources. But there is no question that things are changing, and for the better.

Why? What explains these striking developments? Seasoned observers offer different explanations, but here are a few:

  • First and foremost, the increasing globalization of the economies in virtually every market in the world. Fueled by travel, popular culture and technology, consumers everywhere can now be considered legitimate targets for many goods and services.
  • The economic woes of the United States and saturation of the domestic market have impelled previously complacent U.S. franchisors to look abroad more seriously.
  • Conversely, and somewhat ironically, foreign franchisors are prepared to bet that the U.S. economy will recover and that there are relative bargains (companies, as well as properties) that can ease entry into an otherwise daunting market.
  • There is a perceptible generational slant here: Younger franchisors have come of age with a rather different view of the world than their elders. That world simply seems smaller to them, and more accessible.

What do you think are the reasons? And is this the new normal, or only a passing phase?

Philip F. Zeidman is a senior partner in the Washington, D.C. office of DLA Piper US LLP. 
He is general counsel to the International Franchise Association. Phil can be reached at
Philip.Zeidman@dlapiper.com.

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