The service offers a gold key for American franchisors to open new global markets. Here’s why
The U.S. Commercial Service (USCS) is often viewed as an unsung hero within the U.S. Federal Government when it comes to its contribution to U.S. exports. This is especially true when it comes to U.S. franchisors, who utilize USCS services to expand internationally.
Having worked across more than 50 countries with U.S. franchisors, I’ve used USCS services hundreds of times over the past three decades. In fact, I estimate that the USCS played a role in at least 80 per cent of my international franchise projects. It’s no secret that I’m a big fan of the USCS, and I consider it to be the best use of tax dollars in the U.S. government.
Any U.S. franchisor with international ambitions needs to become intimately familiar with the USCS. Let’s dig a little deeper on the organization and its services to help U.S. franchisors go global.
What is the U.S. Commercial Service?
The USCS is the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration. According to the agency’s website, the USCS mission is to “promote and protect U.S. commercial interests abroad and deliver customized solutions to ensure that U.S. businesses compete and win in the global marketplace.” To deliver these customized solutions, USCS trade specialists are located throughout the U.S., as well as in U.S. embassies and consulates in over 75 countries around the world.
Specific to franchising, the USCS has set up a team of over 100 trade specialists, both in the U.S. and abroad, who specialize in helping American franchisors to export their concepts worldwide. This USCS global franchising team has specialized training, skills and experience to help franchisors, and it’s led by Eric Johnson, global director of franchise programs at the U.S. Department of Commerce.
According to Johnson: “The global franchise team at the Commercial Service is a group of like-minded international trade specialists, who share a true passion for franchising, and we love working with our American franchisors to help build US franchise brands worldwide.”
Among U.S. franchisors, the most popular USCS solutions include:
Gold Key Service (GKS):
Over the past couple of decades, the GKS program became one of the most common matchmaking services used by U.S. franchisors to find new master franchisees and area licensees in global markets. Once the franchisor provides specific information on the franchise offering and ideal profile of franchise candidate, the USCS team completes an in-country partner search to pre-screened and vet interested candidates. Within about eight to 12 weeks, the USCS will arrange for the franchisor representative to visit in-country for a fully scheduled meeting agenda with finalist candidates. Optional services of the GKS may include transportation, hotel arrangements, interpretation and supplementary advertising. Not all countries, however, offer the GKS.
International Partner Search (IPS):
This is another matchmaking services program that provides a “lighter” solution than the GKS option. It starts with a similar partner search, after which the USCS team prepares a report with a list of interested prospects. The U.S. franchisor representative then follows up directly with the candidates to vet them, narrow the list and arrange meetings as needed. The IPS is often preferred by more experienced international franchisors who like to “set their own pace” in the matchmaking process.
Certified trade missions:
The USCS and International Franchise Association (IFA) have a long-standing collaborative relationship in co-hosting international franchise trade missions. These Certified Trade Missions – often covering multiple countries – are planned and led by IFA and USCS personnel with the support of U.S. embassies in each market. The typical itinerary might include several key cities, with one or two days in each location. Trade mission agendas always feature prearranged meetings with potential partners or investors, briefings by market experts, as well as site visits and other official events.
International franchise trade shows and events:
USCS trade specialists frequently arrange special programs at major franchise conventions and trade shows, such as the IFA Annual Convention, the International Expo (IFE) in New York, and other regional franchise events and expos around the world. One service commonly offered at franchise events is the International Buyer Program (IBP), which organizes international buyer delegations to meet one-on-one with U.S. franchisors. At many of these events, U.S. trade specialists also offer in-person counseling meetings for U.S. franchisors, who are interested in expanding into in a specific country or region.
International Company Profile (ICP):
The ICP is a background report on foreign firms that is researched and prepared by USCS staff in-country. This report is an invaluable tool for franchisors to complete deeper due diligence on a prospective international partner or franchisee, prior to finalizing any agreements. The report can be tailored to address specific questions, but typically the background check includes business activities, local business reputation, creditworthiness and other factors to determine the suitability of the partner candidate.
The USCS has a wealth of market research available for franchisors, much of it free. This starts with Country Commercial Guides, which provides an overview of doing business in specific international markets, including eight important factors to help you decide if a market is right for your product or service. A franchisor may also request an Initial Market Check (IMC), which is a custom USCS market intelligence service to evaluate a specific country’s potential for their product or service.
TIP: To access free online USCS market research specific to franchising, go to export.gov/industries, and select ‘franchising’. In particular, check out the Export Resource Guide for Franchising, with country-by-country market analysis.
What if you are not a U.S.-based company?
While the USCS is focused on helping outbound American exporters, they can also provide valuable resources to internationally-based franchisors and franchise sector suppliers. First, if a franchisor or supplier is seeking to establish operations in the U.S., they should ask USCS representatives about the “Select USA” program, which provides resources that promote and support foreign direct investment into the U.S. Secondly, the USCS teams at embassies and consulates provide opportunities to connect U.S. franchisors with qualified partners or suppliers across the world. In this way, USCS can act as a liaison between American franchisors and the local franchise communities in each international market.
American franchisors’ biggest ally for global expansion
As an American franchise executive, I’ve always felt a sense of confidence knowing that the U.S. government has my back as I work to build U.S. franchise projects worldwide. Over the past several decades, the USCS has played a critical role in American franchise brand expansion globally, and U.S. franchisors owe a debt of gratitude. Without the USCS, our global franchise landscape would look very different today.
4 tips on maximizing your relationship with the USCS:
1. Connect with your local U.S. Export Assistance Center (USEAC): These are regional offices of the USCS, located throughout the U.S., which act as a local resource for U.S. exporters. USEAC staff can provide more details options and on pricing on USCS services, which are amazingly affordable!
2. Become you franchisor’s brand ambassador: When traveling internationally, stop by the local U.S. embassy or consulate to meet with the USCS foreign service team in-person. This meeting may be arranged in advance through your local USEAC.
3. Join your local District Export Council (DEC): With regional chapters across the U.S., the DECs are volunteer groups of executive advisors, who work closely with the USCS in their export promotion efforts. Numerous international franchise executives – including the author of this article – serve as DEC Members across multiple states.
4. Share your success stories: When your company has a “business win”, such as signing a new international franchise, take the time to notify your USCS contacts, so they can report out on the success story. Not only does this help promote your company, but these success stories are a critical internal measurement for USCS team evaluations and budget allocation.
U.S. COMMERCIAL SERVICE FRANCHISE ANNOUNCEMENTS
Eric Johnson, CFE, global director of franchise programs at the U.S. Department of Commerce
Each year the USCS highlights at least one region of the world for franchisors to consider taking their brands, and this is normally through a certified trade mission. This year the trade mission is co-sponsored with the IFA and will include visits through both Frankfurt and Budapest in November 2019. Participating franchise brands will receive franchise briefings from local country experts and have vetted appointments with potential franchisees. Programs of this nature can spearhead entry into markets where franchisors have not previously focused efforts or need assistance in opening relationships.
We are also excited to launch a new certification project in 2019, developed between the USCS and the IFA, called the Franchising Sector Specialist designation. USCS staff and management are able to complete this four-pronged professional development series to build a deeper understanding of the franchise industry, and to provide the franchising community with further trained trade specialists, who understand the vernacular and mechanics of franchising. Staff focus 75 specialized training hours in developing industry knowledge, establishing a franchising eco-system of connections, completing IFA-approved training courses, and taking part in industry events. Completion of this certification program provides advanced standing for those interested in completing the International Certified Franchising Executive certification.
For more information, email: Eric.Johnson@trade.gov
Ray Hays is managing partner at FranLaunch USA, a franchise management firm that facilitates U.S. market entry for international franchisors. He also serves as a member of the District Export Council of Arizona, a volunteer executive advisory group that supports the export promotion efforts of the U.S. Commerical Service