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PARAMUS, N.J. — After two decades in Washington, D.C., the nation's largest franchise expo has had enough. The International Franchise Expo is packing up and moving to New York City.
Where it once commenced in the nation's capital when cherry blossoms bloomed, this year the IFE will run from June 15 to 17 at New York City's Jacob Javits Convention Center. Some 200 firms will be there, seeking to find franchise buyers.
"Every year the International Franchise Expo is responsible for the opening of hundreds of small businesses and creating thousands of jobs – and there's no better place for that to take center stage than New York," said Tom Portesy, president of MFV Expositions, producer of the IFE. "Small business growth will be a significant factor in our economic recovery and we know New York City is the place to lead the charge."
MFV estimates that the show that it organizes for the International Franchise Association will especially benefit from New York City's gaggle of national news media outlets, such as the Wall Street Journal, Time, Fortune, USA Today and others that will cover the event.
But why move after being established so long in the nation's capital, nestled near its contractor, the International Franchise Association?
"I have seen the traffic and quality of prospects diminish over the past several years," says New York-based franchise consultant Ed Teixeira, who first exhibited at the show 20 years ago. He thinks the expo's move to New York City has been a long time coming. "New York provides so many benefits for a franchise trade show, ranging from a large diverse population of 28 million to being the media capital of the world," he explicates.
"We've had a difficult time," states expo president Tom Portesy about the D.C. show attendance of late. He speaks about how from 2009 to the present, franchisors have had difficulty selling franchises because franchisee prospects have not been able to tap into capital. "A lot of franchisors pulled back a great deal on [purchasing] lead generation and expansion because of the difficulty of access to capital." Portesy adds that former franchisor clients now prefer to invest in their existing infrastructure, rather than seek new franchisees to expand.
"We've shrunk. We've contracted as a company," declares the company's president.
He's not alone.
"We've been hit hard, just as they have," says expo manager Ken Muir of National Events, a competitor that operates 15 smaller regional franchise shows in the United States, compared to the three large franchise shows that MFV organizes for the International Franchise Association in Miami, Los Angeles and now New York City. Muir declares, "It's harder now than it was back in 2006 and 2007. With the financial crisis that hit and people losing the equity in their homes, it has affected franchise investors and us."
Some 80 foreign commercial service offices promote the IFE annually in over 60 countries, according to the exhibition organizer. But the firm has decided that it doesn't need to be in D.C. for that to happen.
"Probably 25 percent of our attendees come from outside the United States. These are a huge asset to the event because these individuals acquire master licenses," declares expo head Portesy. International master licenses are for buyers who want to secure the development rights of a franchise for a country. The right of being a sub-franchisor, to be able to sell franchises and collect royalties in a country, costs many times more than buying a single franchise unit. Portesy adds, "There's probably only one city in the United States that we would consider leaving D.C. for that would keep the same international presence, and that is New York City."
Teixeira, author of The Franchise Buyers Manual, adds that New York City is even more of an international gathering place than even Washington, D.C. "It is an added plus," he says.
Competitor Muir agrees. He is surprised that MFV didn't leave D.C. years ago. Why is he surprised? Because Muir doesn't think D.C. is quite the right target for people who look to invest in a franchise. "Washington in my mind is a city of lawyers and bureaucrats," he says.
"It probably made sense to move to New York 18 years ago, but being the geniuses that we are, we move kind of slow," states MFV's Portesy. He agrees that the make-up of attendees in the nation's capital is different than New York City's. "New York is entrepreneurial, while D.C. is not," he observes.
New York State is going out of its way to help too.
To encourage visitors and companies to come to the Empire State, the New York Attorney General's office allowed franchise companies not currently registered in New York to apply for a three-day exemption from franchisor registration so that they can more easily showcase their brand at the IFE. The form can be downloaded through the Attorney General's Website. It requires a $450 fee.
Franchise expert Harold Kestenbaum, an attorney with New York City-based law firm Gordon & Rees, explains what the exemption means to franchisors that plan to exhibit at the show. "For the first time the New York State Attorney General has agreed to amend its franchise sales act to create a one-time exemption for exhibiting in trade shows that take place within New York," observes the author of So You Want to Franchise Your Business.
"In the past, unless a franchisor registered their franchise disclosure document with the Attorney General first, they would not be permitted to exhibit at a New York show," declares the New York attorney. Kestenbaum adds, "With this new exemption, franchisors can now exhibit without being in violation of the law. The catch is, while they can exhibit, they cannot make any sales until they are registered with the state. So they can exhibit, but they cannot close deals on franchise units. When they say 'showcase,' that is all they mean."
Competitor Muir stresses that MFV's ability to arrange an exemption by the State for franchisors is a big thing. "That's why our [National Events regional franchise] show was never in New York. It was always in New Jersey. That's because we could never get that exemption. MFV has the industry behind them," the National Events franchise expo manager states.
Teixeira again stresses that this is a good move for the IFE. "I'm going to go against the recent downward trends of franchise trade show attendance and exhibitors and predict that next year's IFE in New York City will provide a shot in the arm for franchising. I realize that the Internet, social media and other vehicles may have diminished the appeal of the traditional franchise trade show. However, the move to NYC by MFV will make a difference."
The IFE's smaller rival is less sanguine in what he sees. "Buyers are coming back a little bit in 2012, but it's still going to be slow growth," says Muir. "There's not going to be any boom until banks, the Small Business Administration and others really start lending."
MFV's Portesy now sees a better future. A number of large franchisors such as Denny's Corp, Hardee's and IHOP, which weren't recently exhibiting in D.C., will now be in New York City. That's an encouraging sign. "I think New York City will allow us to be the biggest franchise show in the world within three years," Portesy projects.