The 'Diaspora Market'
Dateline: Miami Beach, Florida.
A conference room in the Miami Beach Convention Center, where one of several educational programs is being conducted during Franchise Expo South. The title: “Franchising and Latin America: A Two-Way Street.” The audience is composed of the typically unpredictable mixture at these events: Some franchisors. Some franchisees. Some who want to become one or the other. Some suppliers. (And the occasional puzzled man who looks as if he wandered in—thinking, one suspects, that he is at the boat show.)
The subject, as the title indicates, is franchising north from Latin America to the United States, and south from the U.S. to Latin America. There is a lot of territory and dozens of countries to cover, so the questions come fast and furious. Most are sophisticated, some less so (mercifully, there are none from the boat show guy).
What is perhaps most interesting is the nature of the members of the audience, and an unexpected characteristic they seem to share: Virtually everyone there is either a Latin American but with family and friends in the States. Or a North American who hails from Latin America, or whose family came here, usually no more than one generation back. In most cases the product, the service, the target market or the planned location of the franchise operation is linked to the homeland of the attendee, or his family.
Which brings to mind the concept of a “diaspora.” For most of our lifetimes that’s a term we’ve heard, if at all, referring to Eastern European refugees fleeing the Holocaust and World War II, and forming communities in more welcoming countries around the world. In fact, the term is Greek, meaning “scattered,” and originally was not limited to involuntary departures; it even included citizens of a dominant city-state who immigrated to a conquered land with the purpose of colonization. In more modern times, the concept has been distilled, retaining the notion of a group of people leaving their homeland but holding fast to a collective memory, preserving the language, retaining cultural ties and frequently providing financial support. In our own era we have also seen the added feature of an “uprooted” people building substantial communities of their countrymen in their new land and frequently becoming an economic and political force there.
Thus, diasporas have in many instances: become powerful centers of influence, served as a magnet to more of their countrymen, created their own thriving commercial and financial communities, cultivated their own entrepreneurs and accumulated buying power, attracting the attention of the larger society. Sometimes they have even developed financing vehicles to fund their own, who sought broader economic opportunity (such as the Hebrew Immigrant Assistance Society of the late 19th century, and in recent decades the techniques refined by some Asian communities in this country).
This has taken many forms, ranging from the extraordinary power of the “overseas Chinese” in many countries of Asia, to the impulse by merchant princes in North America to demonstrate their success to the villages of Eastern Europe which their grandparents left. Sometimes the governments in their lands of origin seek to maintain ties with former citizens, well aware those who have prospered may be gratified by the opportunity to invest in the communities they left behind.
That’s where franchising enters the picture. It isn’t hard to connect the dots. Here are just a few of them: Indian immigrants (many from a single village) flood into the budget hotel sector in the U.S., and the Asian American Hotel Owners Association becomes a force to be reckoned with. indUS Business Journal, which reports on matters of commercial interest to the Indian-American community, has a section regularly devoted to franchising. When the U.S. State Department initiated a program to revitalize the Tunisian economy in the wake of the Arab Spring, franchising was a principal focus … and the Tunisian diaspora in this country was deeply engaged. And the list goes on.
Which brings us back to that conference room in Miami, and to the larger force in our society, of which it is a microcosm. Virtually every person in that room, whether a prospective franchisor or prospective franchisee, and whether planning to take a U.S. concept south or bring a Latin concept north, was a product of or intimately familiar with the Latin American diaspora in south Florida: Brazilians bringing native specialties to their countrymen in U.S. cities. Ecuadorians developing early childhood education programs to be franchised there. Chileans adapting a U.S. product to the special tastes there. The large Cuban community, mixing the commercial instincts, and the cultural values, of both the old homeland and the new. And the same is true, of course, of Polish-American communities in Cleveland, Chinese-American enclaves in New Jersey and Vietnamese immigrant communities in dozens of towns and cities in Southern California.
From these centers of vibrant ethnic cultures will come customers who might not have been reached by broad-spectrum marketing. From them will come franchisees who will respond to tailored offerings of shrewd franchisors. From them will come those who will invest in franchises to be taken back to their home countries, frequently as the financial partners of family members who stayed behind. From them will come the executives who can lead a franchisor’s effort to tap the buying power which resides in those communities. And from them will come franchisors as well—franchisors of products and services and systems developed to serve the tastes and cultures they know so well, either in this country or “back at home.”
Savvy franchisors have homed in on this development. Their R&D departments craft products attuned to these markets. Their advertising and marketing people have learned the customs, and sometimes the languages. Their H.R. staff prospects there, as do their franchise salespeople.
But franchisors who ignore the growing power and opportunity this new force in our society represents will be missing out on one of the great opportunities of our era. They are on the wrong side of demographics. And they may be on the wrong side of history.
Philip F. Zeidman is a senior partner in the Washington, D.C., office of DLA Piper U.S. He can be reached at Philip.Zeidman@dlapiper.com