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The Americans Are Coming

The increasing maturity of the Irish franchise industry and support from US government sources are two of the major reasons why so many US-based franchises have found success in Ireland writes Paul Golden.

On geographical grounds Ireland has always appeared to be the obvious first point of entry for US companies looking to crack the European market. However, until the economy began to accelerate in the 1990s these companies were much more likely to target the UK, with its larger population and even close access to the continent.

This often resulted in UK-based franchisors acquiring the licence for Ireland and servicing it almost as an extension of their home market, which often created problems where licence holders failed to recognise the cultural difference that exist on each side of the Irish Sea.

But after a decade of unprecedented growth, the days of considering Ireland as an afterthought are over. In fact, the greater spending power of Irish consumers has not only encouraged more franchises to seek a presence in this market - it has also enabled many Irish franchisors to acquire licences for the UK and run their operations from this country.

And there are plenty to choose from. More than 18 million Americans are employed by franchise businesses, which account for about 10 per cent of private sector economic output, around one in every seven private sector jobs and half of all retail sales.

The US government has various programmes in place to develop US franchises in international markets, including Ireland. In fact, it is a widely held view that the US government does more than any other administration to nurture its franchise sector, which is one of the reasons why it remains the dominant player in this market internationally.

In Ireland, the US Commercial Service assists American franchisors identify master licensees through its Franchise Partner Search Program and once they are established in the market it can also help them to identify unit franchisees.

Located in the US Embassy in Dublin, it is part of a network of more than 200 US Department of Commerce domestic and overseas offices worldwide whose mission is to promote the export of goods and services of American companies and develop and protect US business interests in Ireland.

Since 2004, the US Commercial Service has assisted 35 American franchisors enter the Irish market and in last six months alone, it has worked with 15 American franchisors to help them identify qualified master licensees.

To meet increasing demand from US companies for franchise partners in Ireland, the US Commercial Service (http://www.buyusa.gov/ireland/en/) maintains a database of potential licencees and franchisees and coaches local prospects on how to find the franchise opportunity that is right for them, explained Finola Cunningham.

"American franchises are now active across 75 industry sectors. We are all familiar with traditional franchises in the food/quick service, commercial cleaning and hotel sectors but new strong franchise concepts are emerging from non-traditional sectors such as senior home care, storage systems and specialty retail concepts selling everything from batteries to customised footwear."

The diversity of franchise offerings is reflected in recent entrants to the Irish market, which include dating services (Its Just Lunch - www.itsjustlunch.com); specialty footwear (Foot Solutions - www.footsolutions.com); outdoor lights (Outdoor Lighting Perspectives - www.outdoorlights.com); quick service restaurants (Salad Creations - www.saladcreations.net); and novelty food (Candy Bouquet - www.candybouquet.com).

While mature franchises in the commercial cleaning, real estate and food/restaurant sectors continue to grow at a fast rate, new emerging franchises are now featuring among the fastest growing concepts in the US.

Europe poses many challenges for American franchisors in terms of diversity of culture, language, legal, financial and commercial environments. "An increasing number of US franchises are now focusing on Ireland as their first entry point to Europe," said Cunningham, who is team leader for the US Department of Commerce's global franchising team.

US franchisors cite a variety of reasons for entering the Irish market. These include:

A healthy supply of potential franchise investors

· Attractive market potential for their product/service offering

Making headlines - a number of American franchises here have already received the accolade of being the most successful start-up in their system worldwide
Ease of doing business in Ireland in terms of common business practices
Common language
Access to the UK - franchisors see Ireland as a gateway to the UK market as more ambitious Irish companies acquire the master license rights for both markets. Recent examples of this new trend include Aussie Pet Mobile, Fast Fix Jewellery, Foot Solutions Instant Imprints, Salad Creations, Team Logic and Two Men & A Truck

The key steps in setting up a US-based franchise in Ireland include conducting market research to ascertain market potential and assess the transferability of the franchise concept into the Irish market; registering of company trademarks; obtaining advice from local experts on franchising in Ireland from a legal, financial and commercial perspective; identifying qualified master licensees or area developers using the most efficient lead generation techniques; conducting due diligence on prospective master licensees; working out terms of agreement, outline of business plan and development schedule; and agreeing on a detailed business plan and conducing necessary training in the US.

"Only a few years ago, many American franchises entered the Irish market via the UK," continued Cunningham. "The master licence was awarded to the UK master licensee as an add-on to their franchise agreement and more often than not, the Irish market was never fully developed. Our advice to American franchisors was always to appoint a master license for Ireland otherwise they could miss out on the opportunity to make the most of the Irish market."

"In recent years, the trend has reversed with Irish companies now taking on the master rights for Ireland and the UK. The difference with this model is that the Irish entrepreneurs will first establish the franchise in the Irish market, making sure that the pilot is successful and that all the problems associated with starting up a business are ironed out. On the back of their experience and success in the Irish market, they will then turn their attention to the UK market, which represents a huge business opportunity for them."

Once the master licence agreement has been signed and a pilot is up and running, the US Commercial Service provides assistance in helping the master licensee recruit local franchisees. It also recruits Irish companies to attend US franchise trade shows including the International Franchise Expo, the West Coast Expo and the Franchise Expo South.

The 2006 Irish franchise industry survey conducted by Franchise Direct found that indigenous franchises account for a small percentage of the overall market, with only 14 per cent of systems originating in this country.

While there is evidence of the growth of such companies in the findings of the survey (the percentage of indigenous franchises in the 2004 survey was 11 per cent), the US remains the dominant player for franchise systems in Ireland. More than 40 per cent of franchises in Ireland originating from the US, it is easy to see why the US will continue to be an important source of growth and innovation in the franchise industry.

Some of the US-based franchises currently looking to enter the Irish market include:

1800 Dry Clean - www.1-800-dryclean.com

Abrakadoodle - www.abrakadoodle.com

Applebees - www.applebees

Baja Fresh - www.bajafresh.com

Baskin-Robbins - www.baskinrobbins.com

Batteries Plus - www.batteriesplus.com

Cold Stone Creamery - www.coldstonecreamery.com

Comforcare - www.comforcare.com

Coverall Cleaning Concepts - www.coverall.com

Ductz - www.ductz.com

Dunkin' Donuts - www.dunkindonuts.com