The Top Franchised Countries
WASHINGTON, D.C. (Blue MauMau) - It is a simple question. Where are the countries with the most franchise units? But coming up with an answer has not been easy. Ask franchisors, franchise associations or international experts and you’ll get as many different answers as there are people. A source at the International Franchise Association answered, “Outside of the U.S., Australia probably has the most franchise units and owners”. Another source lists Mexico as the second largest country. And a third said, “Brazil”.
So Blue MauMau has scoured the globe, making countless calls to find out where the bulk of our fellow franchise owners live. The slides above show our best estimate.
The U.S., Japan (at over 220,000 units in both franchised and corporate units), and Canada stand out as the top three countries. This is followed by Germany and France.
Inflating for the Attention of American Franchising Firms
Why are the franchise estimates so foggy and difficult to come by?
There's no exact count of franchised units. Countries sometimes count small businesses but no one counts franchisees or franchised units.
As far as estimates, observes Bill Edwards, President of Edwards Global Services, Inc., a firm that helps franchisors spread abroad, “International franchise statistics can be made to say just about anything.”
Franchise units by country have a tendency to be inflated to entice U.S. multinational franchising firms to pay attention.
For example, Kate Wilkie, a commercial specialist working for the U.S. Consulate General in Melbourne wrote last month in Franchising World, "Australia now has the most franchising outlets per capita in the world and three times more per capita than in the United States." The article concludes, "IFA is now planning a trade mission to Melbourne and Sydney to take advantage of these opportunities."
That claim seems dubious. Australia’s franchise industry started to take off much later than in the U.S. and Canada when in the 1970s American fast-food franchisors began significant expansion in the land down under. The article quotes roughly 56,200 franchise units for over 20 million people. That would put Australia’s franchise density close to the American density at lower than 400 people per franchise, not three times more. Not to be outdone, the much smaller economy of neighboring New Zealand and its 4 million people claim 14 - 15,000 franchise units. If true, that would make the island nation the densest franchised country in the world at 286 people for every franchise unit.
A Tale of Two Franchisors, Strategic & Opportunistic
“Many franchisors tend to be opportunistic in their international approach”, says Mr. Edwards, referring to franchisors accepting international master franchise fees from anyone with the finances to afford it. If a franchisor accepts master franchise opportunities with the right funding, it isn’t necessary to know where the largest international franchise markets are.
One tale of differing franchisor strategies is between McDonald’s and Subway restaurants. Although younger, Subway has more restaurant units in the United States than McDonald’s. Yet over 50% of McDonald's 30,777 restaurants are international, making McDonald’s a much larger chain. Subway’s smaller and lower priced units should be more exportable, yet the franchise chain remains predominately American with only 14% of their units abroad, mainly in Canada.
Countries that have the most McDonald’s franchised units align quite closely with countries that have the most franchisees. In contrast to selecting the major countries with franchisees, the Subway web site states, “The Subway chain does not select new countries to expand into. In a way, they choose us!”
Mr. Edwards observes, “U.S. franchisors tend to be in it for the initial fees. They often do not provide significant support or even specialized training for a master franchise as opposed to single-unit franchisee training." He continues, "Initial fees in international operations can be consumed quickly. That's why it is important for franchisors to focus on the right strategic markets because that will support long-term operational profits.”
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Special thanks to:
- Ms. Carol Chopra, World Franchise Council
- European Franchising Magazine
- European Franchise Federation
- Ms. Lorraine McLachlan, Canadian Franchise Association
- Mr. Jens Brenk, Deutscher Franchise-Verband
- Franchising World, Franchising Strikes a Cord Down Under
- Japanese Franchise Research Institute
- Mr. Paulo Antunes for showing Portaldo Franchising (Brazil)
- International Franchise Association
- William LeSante, LeSante International
Other resources:
- Spreadsheet of World Franchise Council's country breakdown by franchise unit
- US Franchise Unit Number, World Franchise Council
- Largest economies of the world, AustralianPolitics.com
- Franchise topic:
It looks like another international myth bites the dust. If you've ever been to Australia, just think of it. Their skyline isn't nearly as filled with franchise networks as ours is. If you doubt it, just look at the photo in Peter Birkeland's blog. Or read Michael Seid's blog about franchises in typical Main Street USA. America is the nation of franchises, bar none.
But Australia also is dense with franchises.
Population
People per Franchise
At 795,000 franchises plus, America is clearly the franchise king - uh, Republic. But it's even way ahead in franchises per number of people. Want to know how inundated with franchises the U.S. is? It takes just 375 people for every franchise in America, compared to 405 for Australia.
Craig
Australia's Border Mail newspaper is the latest to claim that Australia is the mostest when it comes to franchising.
Ah, but "most franchised nation" is used here with new franchisors, not as it normally is with business format franchised units. Extrapolating from the quote above, 73 new franchisors are projected for '07. Impressive. (With 15 times Australia's population, the U.S. is estimated to have created 1100 franchise systems in the past two years.) The term "most franchised country" is used when it seems to be actually talking about franchisors per capita.
And what country has the most franchisors per capita?? Unknown. But Australia may be claiming the title.
FranSynergy: "this came as a result of the recent acquisition of Blimpie by Kahala Corp."
Kahala is a great organization. I'd be doing back flips if my less than stellar franchiser was bought out by them, and they didn't have a competing franchise in my territory. However, I just want to point out that Blimpie is yet one more on the 15 Franchiser's With the Worst Failure Rate to be acquired or disappear.
There's a definite trend. Many on that list are disappearing. And notice how these franchisers are not the one acquiring but rather being acquired.
I say we've discovered a list of franchisers that are shark bait. If I were in M&A's, this would be the short list of franchisers to buy, fix, turn around, or liquidate.
Frankman
Let me clarify the numbers. I'm not sure the 8.3% SBA loans of the 1600 restaurants in the system mean much.
The SBA disbursement number for loans are from Oct 1, 2001 through Sep 30, 2005, a four year period. To compare apples to apples, we should compare Blimpie stores that were given loans during the same 4 year period, not compare the total 1600 stores in their network that have been established for the past few decades to failed SBA loans of the last 4 years. So, if hypothetically 430 Blimpie restaurants were disbursed loans during that time, then 130 were SBA loans, and of that amount we know that 43 (31.39%) of the SBA loans failed.
Of those 43 which failed, 9.06% or 4 were charged off as non-recoverable bad loans by the SBA. Hope this helps.
Mr. Blue MauMau