Opportunity knocks: franchising in Spain - Spain: 1992 and Beyond

The Spanish economy has one of the European Community's fastest rates of growth, and it has enjoyed a tremenous amount of foreign investment as companies prepare to take advantage of the ongoing integration of the EC's internal market. That strong growth has generated high demand for a broad range of products and services. Franchising has become a top business prospect in most EC countries.

To take advantage of the exciting opportunities available in the Spanish market, the Innternational Franchise Associataion (IFA) led a trade mission of nine American franchisors to Madrid this past June. Each company met with prospective investors interested in purchasing the rights to develop U.S. franchise systems in Spain.

IFA was founded in 1960 and is the oldest and largest association representing franchisors in the world. IFA, located in Washington, D.C., serves as a resource center for both current and prospective franchisors and franchisees, as well as the government and the media.

IFA Organizes Trade Missions

IFA organizes trade missions for U.S. franchisors in conjunction with the U.S. and Foreign Commercial Service (US&FCS) under the Industry Organized-Government Approved (IOGA) program. IFA has led American franchisors on successful IOGA missions to countries in Europe, Asia, and Latin America.

Trade mission members have individual appointments with prescreened and qualified investors that meet the objectives of each participant. IOGA missions allow companies to investigate international business opportunities with a minimal investment of their time and money, and with the support and assistance of the IFA Mission Director and the in-country US&FCS staff.

Sooner or later, almost every successful franchisor looks beyond the borders of the United States for expanison opportunities. the world market, for times larger than our domestic market, provides excellent growth potential for American franchisors that, within the United States, compete in the world's most mature franchise market. In 1990, the United States had 386,118 business format franchise outlets such as restaurants, business services, and retail.

During the past 20 years, the number of American franchisors abroad has nearly tripled. Today, there are almost 500 U.S. franchisors doing business internationally, and several hundred more are planning to expand abroad in the near future.

Within Europe, the United Kingdom and France have the most highly developed franchise sectors, although they are relatively small when compared with the U.S. market. As the integration of the European Community has advanced and other EC members have initiated reforms and stimulated growth as a result, more and more American franchisors are exploring business opportunities throughout Europe.

IFA first led a trade mission to Madrid in June 1990, and it was an outstanding success. Trade mission participants had more business appointments with potential investors than on any other trade mission IFA has organized. There was excellent press coverage of the mission in major newspapers and magazines, and in general, there was a very high level of interest among Spaniards in American franchise systems, prticularly in fast food, commercial cleaning, and other service franchises.

The IFA mission to Spain in June of this year was even more successful than last years's. As a result, IFA is planning another mission to Madrid and Barcelona in June 1992.

Spain is an excellent market for U.S. franchisors not only because of its strong economy and increased demand for products and services, but also because of the interest in and acceptance of American products and services. This feature makes the Spanish market easier for U.S. companies to enter than is the case in many other European markets outside of the United Kingdom.

As an example, during the trade mission to Madrid this past June, IFA met with the Spanish owner of a successful chain of restaurants in Madrid. The owner wanted to convert his restaurants into an American franchise because of the popularity of American products and services in Spain. Although already successful as a Spanish business, he believes that his franchise will be even more successful if his business and menu are American.

Although franchising is relatively new in Spain, it is growing rapidly and will continue to expand because it is the most efficient means to meet the Spaniards' increasing demands for goods and services. In 1986, there were 90 franchisors in Spain with 8,200 outlets; and by 1990, the number of franchisors had grown to 320 with 24,000 outlets. However, many of those 230 franchisors are small companies that have only recently begun operations.

There is currently very little substantial competition in the Spanish market for U.S. franchisors. Spain's vibrant economy, combined with the popularityy of American goods and services, makes this country an excellent business prospect for U.S. companies.

COPYRIGHT 1991 U.S. Government Printing Office
COPYRIGHT 2004 Gale Group