In the UK, we’re surrounded by American brands. We go to McDonald’s and Starbucks, grab sandwiches from Subway, and burn off the calories in our Skechers with a stint at Anytime Fitness on the way home. Here, we’re taking a closer look at America’s international franchising sector and why it’s so successful.
Last year, franchises in the US generated $787 billion (£584 billion) and employed over eight million people. Looking at the country’s international presence, 38 percent of the units belonging to the 200 biggest American franchises are located outside of the US. Between 2012 and 2015, these companies added four international units for every single unit it launched within America’s borders (USCS).
Fast food is one of America’s top international franchising sectors. In fact, 30 percent of people who are thinking about joining a franchise in the US say they’re most interested in starting a quick service fast food business. The sector’s success is clear to see; McDonald’s alone brings in over £71 billion in total sales revenue across the world (Statista).
So, why is America’s international franchising strategy so strong?
Why do US franchises in the UK do so well?
Here are just some of the factors contributing to the success of American franchises in the UK:
- We share a similar culture - Establishing a connection with customers is important in any business, and UK consumers can usually relate fairly easily to American brands. The similarity in US and UK cultures, lifestyles and trends means franchises from across the pond are often accepted with open arms by an enthusiastic British audience.
- There’s no language barrier - Unlike other countries, the UK and the US share the same language, so communication is easy between franchisors and franchisees, as well as suppliers, employees and other stakeholders.
- Americans are open to risk - Some say people in America love to cheer the underdog and celebrate successes gained through blood, sweat and tears. A willingness to take risks could have helped US entrepreneurs dream big and establish global companies.
Entrepreneurial risk-taking is deeply embedded in US culture. The ability to take positive risks and bounce back from setbacks will help any company looking to expand internationally.
— Dave Darsch, business leader and mentor
- Businesses can get a headstart - America has a large, bustling market for entrepreneurs. The country generates a huge GDP and has the same language and consumer buying patterns from one state to another. These factors create a hospitable environment for businesses, giving owners the chance to grow strong companies before expanding into global territories.
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How has America mastered the franchise model?
1. It’s introduced regulating bodies
Unlike in the UK, the American franchise industry is heavily regulated. The Federal Trade Commission (FTC) introduced the FTC Franchise Rule in 1979, which imposed regulations on all franchises and has since been regularly updated to allow for industry developments. Non-compliance can lead to reputational damage, hefty fines and civil proceedings against both the franchise and the individuals associated with the business.
As a result of America’s robust regulatory systems, franchisors place a huge focus on franchisee due diligence. Anyone interested in partnering with a US franchise should be prepared to go through a lengthy and strict vetting process.
2. Franchisors focus on the disclosure document
Successful, well-established and ethical franchisors in the UK usually have a Franchise Disclosure Document (FDD) for prospective franchisees to find out more about the business. However, as there are no laws regulating franchising in Britain, the use of an FDD is purely down to franchisor discretion.
Among American franchisors, there’s much more of an emphasis on giving prospective franchisees all the information they need to make an informed decision about joining the franchise. As a result, investors go into the partnership with a solid understanding of their future lifestyle and responsibilities, limiting the chance of complications further down the line.
3. Franchise agreements go into great detail
All franchise agreements are lengthy and complicated, but American franchise contracts tend to be even longer and more complex. It’s important prospective franchisees consult a specialist franchise solicitor to help them understand the document before they sign on the dotted line.
Compared to UK contracts, American franchise agreements are a lot more rigid when it comes to franchisee obligations. They tend to give the franchisor more rights, and restrict the control enjoyed by the franchisee.
Why is America so entrepreneurial? It boils down to a confluence of money, empathy and culture.
— Mike Maddock, Forbes
The top American franchises in the UK
Many of our most recognised and loved franchises here in the UK were actually established in the US. Food, and fast food in particular, is the biggest sector among American franchises, with an impressive number of globally renowned brand names.
Here are some of the UK’s most famous industries and franchises from the US.
- Pizza Hut
- Papa John’s
- Burger King
- Five Guys
- Dunkin’ Donuts
- Auntie Anne’s
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- Snap-On Tools
- Century 21
Cleaning and refurbishing
- ServiceMaster Clean
- Merry Maids
- Anytime Fitness
- Snap Fitness
Coaching and tutoring
- Sandler Training
- Home Instead Senior Care
- Right At Home
Join the international franchising sphere
Point Franchise partners with companies from all over the world to bring investors the very best opportunities out there. If you’re interested in joining an international franchise network and benefitting from its widespread success and experience across global markets, take a look at our business directory. Alternatively, you can browse our franchise opportunities by sector or investment cost from the menu.
We also have a huge selection of research-based business guides to support entrepreneurs as they develop franchise businesses. Browse our most recently published articles or use the search box for specific queries.
Alice Tuffery, Point Franchise ©