Franchising

SUMMARY

The global outlook series on Franchising provides a collection of statistical anecdotes, market briefs, and concise summaries of research findings. The report provides a rudimentary prelude to the worldwide Franchising industry. The discussion summarizes, in addition to other market variables, the advantages of franchising, and the impact of internet

TABLE OF CONTENTS

1. Industry Overview 1

• Table 1: Global Leading Hotel Companies (2005): Number of Hotels Franchised and Total Number of Hotels for Wyndham Worldwide, Choice Hotels International, Intercontinental Hotels Group, Hilton Hotels Corp., Marriott International, Accor, Carlson Hospitality Worldwide, Golden Tulip Hospitality/THL, Global Hyatt Corp., and Tharaldson Enterprises 2
• Advantages of Franchising 2
• Small and Medium Sized Enterprises 3
• Factors Driving Franchising Business 3
  • Globalization Charges Up the Franchising Sector 3
  • Aging World Population Drives Up New Franchising Businesses 3
  • Franchising Booming Due to Baby Boomers 3
  • Franchising Sector Capitalizes on Online Learning Programs for Kids 3
  • Online Facilities Facilitate Franchising Business 3
  • Involvement of Banks to Encourage Potential Franchisers 4
• The Secret of Success 4
  • Population and Market Size 4
  • Urbanization 4
  • Literacy 4
• Corruption 4
• Proximity to Larger Nations 4
• An Overview of the Personal Services Sector 4

2. Trends and Issues 5

• Franchising Sector to Witness Strong Growth 5
• Commercial Franchising Sector Growing Fast 5
• Asia and Africa Emerge as Promising Regions 5
• Technology and the Internet 6
• Websites are Vital 6
• Business-to-Customer E-Commerce (B2C) 6
• New Disputes 6
• New Laws to Shape Up the Franchising Sector 6
• New Businesses 7
• New Franchising Concepts Catching Up 7
  • Brewing Special Coffee 7
  • Staffing and Business Services 7
  • Niche Gyms 7
  • Non-Medical Healthcare 7
  • Education and Tutoring 7
• Mergers, Acquisitions, and Alliances 7
• Latest Trends 8
  • Franchising Concept Spreads Across the Food and Business Consulting Sectors 8
  • A New Beginning for Distressed Industries 8
  • Become a "Semi-Absentee" Owner 8
  • Women Business Owners Prefer to Franchise 8
  • Franchising Enables Home-Based Work 9
• Human Resources 9
• Retailing 9
• Franchisee Outlets 9
• Challenges to be Tackled 9
• The Future Franchising Scenario 10

3. Mergers And Acquisitions 10

4. Strategic Corporate Developments 21

5. Products/ Service/Concepts/ Program Launches 26

A REGIONAL PERSPECTIVE

1. North America 27

1a. United States 27

• Preview of the US Franchise Industry 27
• Market Trends 27
• Trade in the Franchise Market 28
• Franchising Growth at Pinnacle 28
• Franchising - The Concept of the Future 29
• Franchising - Means of International Expansion 30
• Costs and Benefits of International Expansion 30
• Good as Gold: Hottest Franchising Trends 30
• Senior Care 31
• Kids 31
• 'Invincible' Franchises Face Tough Challenges 31
• Minorities in the Future Franchises 32
• Interests in Targeting the Latino Market 32
• New Arenas 32
• Restaurants 33
  • Table 2: United States' Select Cafe/Bakery/ Sandwich Restaurant Chains (2005): Sales in US$ Million for Subway, Arby's, Panera Bread, Quiznos Sub, Einstein Bros. Bagels, Jason's Deli, Blimpie, Au Bon Pain, Wienerschnitzel, Schlotzsky's, McAlister's Deli, Corner Bakery Cafe, Atlanta Bread Company Bakery Cafe, Jimmy John's Gourmet Subs, and Togo's 33
  • Table 3: United States' Select Family Dining Restaurant Chains (2005): Sales in US$ Million for Denny's, IHOP, Cracker Barrel Old Country Store, Bob Evans, Perkins Restaurant & Bakery, Waffle House, Steak 'n Shake, Friendly's, Village Inn, Marie Callender's, and Restaurant & Bakery 34
  • Table 4: United States' Select Hamburger Restaurant Chains (2005): Sales in US$ Million for McDonald's, Burger King, Wendy's, Sonic Drive-In, Jack in the Box, Hardee's, Carl's Jr., Whataburger, Checkers Drive-In/Rally's Hamburgers, and White Castle 34
  • Table 5: United States' Select Buffet/Cafeteria Restaurant Chains (2005): Sales in US$ Million for Golden Corral Buffet & Grill, HomeTown Buffet/Old Country Buffet, Ryan's Grill, Buffet & Bakery, Shoney's, Ponderosa/Bonanza, Luby's, Piccadilly Cafeteria, Western Sizzlin, Souplantation/Sweet Tomatoes, and Furr's 35
  • Table 6: United States' Leading Sandwich Restaurant Chains (2005): Percentage Breakdown of Value Sales for McDonald's, Burger King, Wendy's, Subway, Taco Bell, Sonic Drive-In, Arby's, lack in the Box, Dairy Queen, Hardee's, and Others 35
  • Table 7: United States' Leading Sandwich Restaurant Chains (2005): Average Sales Per Unit in US$'000 for McDonald's, Culver's Frozen Custard, Chipotle Mexican Grill/Chipotle, Whataburger, White Castle, Jack in the Box, Wendy's, Del Taco, Carl's Jr., Burger King, and Taco Bell 36
• Sporting Franchise 36
• Key Trends 36
• Outlook 36
  • Table 8: United States' Select Pizza Restaurant Chains (2005): Sales in US$ Million for Pizza Hut, Domino's Pizza, Papa John's, Little Caesars, Chuck E. Cheese Pizza, CiCi's Pizza, Papa Murphy's Take 'N' Bake Pizza, Round Table Pizza, Godfather's Pizza, and Hungry Howie's Pizza & Subs 37
  • Table 9: Leading Restaurant Chains by Company Outlets and Franchise Outlets in the US: 2005 for Canteen Services, Subway, McDonald's, Burger King, Pizza Hut, Taco Bell, KFC, 7-Eleven, Wendy's, Dairy Queen, and Others 38
  • Table 10: Leading Convenience Store Companies in the US and Canada (2005): Number of Licensee/Franchise Stores, Corporate Stores, and Total Stores 38
  • Table 11: Survey of Major League Base Ball Franchises in the US: 2005 Percentage Breakdown of Americans for New York Yankees, Atlanta Braves, New York Mets, Cleveland Indians, Minnesota Twins, Boston Red Sox, Chicago Cubs, Los Angeles Dodgers, San Francisco Giants, and Cincinnati Reds 39

1b. Canada 39

2. Europe 40

2a. France 40

2b. Germany 41

• Franchising Benefits 41
• Challenges 41

2c. Russia 41

• Market Overview 41
• Potential Sectors 42
• Apparel 42
• Cosmetics and Body Care 43
• US Franchisers Discover Potential of Russian Market 43
• Franchising Perfect for Small and Medium Size Businesses 44
• Market Competency 44
• Local Franchisers 44
• US Holds Competitive Advantage 44
• Favorable Economic Conditions 44
• Market Setbacks 45

2d. United Kingdom 45

• Business Mechanics 45
• Business Stance in Europe 46
• Future Prospects 46

2e. Rest of Europe 46

• Bulgaria 46
  • Market Overview 46
  • New Concepts 46
• Belgium 47
  • Fast Food Franchising 47
  • Entry Barriers 48
• Portugal 48

3. Asia-Pacific 48

• Opportunities and Threats 48

3a. Australia 49

3b. New Zealand 49

• Success Breeds Success 49

4. Asia 50

4a. China 50

• Table 12: Chinese Franchising Market (2003-2006): Number of Franchise Systems 51
• Outlook 51

4b. Hong Kong 53

4c. India 54

• Market Review 54
• Franchising Market Scope 54
• Advantages 54
• Health Franchising Upsurges in India 54
• Retail Franchising Scenario 54
• Non-Retail Franchising Scenario 54
• Challenges 54
• Market Potential 55
  • Table 13: Franchising Market in India (2006): Percentage Breakdown of Franchisees by Sector - IT Education, IT enabled Services, Professional Services, Education - Preparatory and Fashion, Retailing, and Others 55

4d. Malaysia 55

• Government Initiatives to Promote Franchising 55
  • Table 14: Advertising Expenditure for Entertainment/Franchise through Television in Malaysia: Annual Market Estimates for 2003 through 2008 in Millions of Ringgits 57

4e. South Korea 57

• Emerging Market Opportunities 57
• Sandwich Franchising Market 58
• Opportunities 58

4f. Taiwan 58

5. Middle East 59

6. Latin America 59

6a. Mexico 59

• Market Insight 59
• Openings 59
• Domestic Franchises 60

7. Africa 60

• Loopholes in African Franchising 60
  • Lack of Familiarity 60
  • Lack of Financing Available to Franchisees and Franchisers as Growth Capital 60
  • Lack of Franchise Regulation 61
  • Restricted Information on Available Market Opportunities 61
  • Expansion of Franchising Operations to Rural Areas 61
  • Suitable Political Environment 61
• Franchise Development Programs Undertaken by AfDB 61
  • Development of Informative Tools 61
  • Development of Franchising Network 61
  • Streamlining the Regulatory Environment 62
  • Providing Financial Aid 62
  • Franchising to Support Small and Medium Enterprises (SMEs) Development 62