Global franchising: making good business sense.

There are more than 23 million small businesses in the United States, but only about 1 percent sell their goods outside the country. Fortunately, the number of businesses that export is increasing, more than tripling in the past seven years. The main reason behind the surge in exporters is fairly simple: small businesses export in order to grow.

Franchising is an extraordinary American success story, generating millions of jobs and billions of dollars in economic activity. Beyond U. S. borders franchising is enormous, especially in developing countries where discretionary income is increasing. Demand exists not only for proven, popular U.S. franchise brands, but for entirely new franchises that can combine U.S. management expertise with local needs for healthcare, recycling, clean drinking water, and more. There is also a need for homegrown franchise concepts that can generate new jobs, profits, and improve the quality of life. U.S. franchising concepts have proven surprisingly adaptable in places where, for example, curry is preferred over catsup.

For those who are looking to shift their domestic business into an international one, there is no better place to start than the U.S. Commercial Service of the Department of Commerce. Through its worldwide network of 1,700 trade experts in 83 countries, the service helped U.S businesses generate export sales worth more than $27 billion last year.

"Ninety-five percent of the world's consumers live outside the United States," says Carlos Poza, acting director general. "Because the world's consumers know U.S. products are excellent, our companies enjoy a competitive advantage--which means big opportunities for U.S. franchisors."

Finding Foreign Buyers

The U.S. Commercial Service offers invaluable assistance to franchisors through every step of the exporting process. It has worked closely with the International Franchise Association (IFA) since 1996 and last year awarded the IFA our Certificate of Appreciation for Achievement in Trade for its role in creating local jobs and giving consumers new choices around the world.

Exporting is by no means as easy as selling to customers in your own backyard. U.S. franchisors need to carefully target the best markets for their products and then be prepared to deal with cultural differences, unfamiliar labeling standards, customs issues and a host of other challenges. Getting help navigating the process of making their first international sale can make a world of difference to a small company. That's where the Commercial Service and its network of Export Assistance Centers proves valuable.

A good first step for franchisors interested in exporting is to call their local Export Assistance Center for an analysis of export opportunities. During this assessment phase, the company works with trade specialists to develop their market entry strategy. Trade specialists have access to a vast amount of market research and, if necessary, can tap into its worldwide network of trade experts.

"We're not in the business of selling cookie-cutter fixes," says Poza. "We offer our clients customized business solutions so they can make that first international sale--and then stay competitive in the global marketplace."

Identifying markets is the service's business. Also included are flexible market research that provides customized answers to questions about how to sell a particular product or service in a specific market, identifying distribution channels, promotion practices, key competitors, pricing, market trends, and more. The service will help companies find the right market for their business--including some they might not have thought of. For example, franchising is one of Singapore's best prospects for U.S. businesses, and the U.S.-Singapore Free Trade Agreement has made it even easier for U.S. franchisors to reach Singapore markets. To learn more about these opportunities, visit the Web site http://www.export.gov/.

Going Global

The agency's services do not stop once a market has been identified. Its International Partner Search and International Company Profile services pre-qualify potential distributors and other partners, conduct background checks and provide recommendations on the reputation of prospective partners and buyers in the local market. Many franchisors also choose to use the Gold Key service to arrange meetings and provide logistical assistance.

The service also offers new kinds of international business solutions, such as the Platinum Key, that are perfect for long-term, complex market entry issues. Another service is BuyUSA.com, a Web site that allows U.S. companies to locate pre-screened international buyers and distributors, get shipping and tariff information, and access export help online.

Exporting simply makes good business sense for many franchises--having customers around the world can insulate against market turbulence and seasonal fluctuation. These advantages often translate to higher rates of growth, increased profitability, and overall healthier businesses.

"This is a great time for franchises, especially small and mid-sized ones, to expand their sales to markets outside the U.S," says Poza.

For more information about how the U.S. Commercial Service can help you, visit www.export.gov/cs.

Sam Dhir is an international trade specialist and Dawn Bruno is an international marketing specialist with the U.S. Commercial Service of the U.S. Department of Commerce. Dhir can be reached at 202-482-4756. Bruno can be reached at 202-482-2575.