International Franchise Expo Attracts Foreign Delegations and Buyers
Monday, November 28, 2016
While IFE is a magnet for drawing people from all parts of the world to franchising, the show gets a huge boost from the International Buyers Program.
By Tom Portesy
Tom Deren, an American working in the State of Kuwait for a wealthy Kuwaiti businessman who was educated in the United States, got an unusual assignment one June afternoon just several years ago.
Tom’s boss was building Sea City, a multi-billion, multi-year enterprise the size of Manhattan, and situated just 10 miles north of the Saudi Arabian border inside Kuwait. Suddenly, the boss decided it would be important to own some of the businesses that would eventually populate his city and serve the well-heeled residents. So he told Tom to identify appropriate American franchise food brands, and select one to begin developing in Kuwait.
It didn’t matter to the boss that Tom didn’t know anything about franchising. Tom was the company’s Vice President of Middle East operations, and business development fell under his bailiwick. Even though he was a bit uncertain about how to proceed, Tom searched for “franchises” online and much to his surprise discovered that the International Franchise Expo (IFE) would open in two days in New York City!
The next day he told the boss he knew where to find dozens of franchise opportunities all under one roof, and the boss told him to get to New York.
Upon arrival at IFE, Tom grabbed the show directory and circled the major franchised food brands. He selected 20 that seemed most appealing. He then spent the next three days visiting the respective booths, collecting information, and talking to the representatives. He also attended some educational seminars, since he felt he needed to get familiar with franchising.
Thanks to IFE, Tom returned to Kuwait with a list of 10 potential acquisitions. Without IFE, he might have been able to build that list over a period of several months, but he still would have lacked the in depth knowledge of the brands, and the relationships that he formed at the event.
When his boss sat down to review the list, almost immediately he said, “Buy Dairy Queen!” It had been many years since the boss had enjoyed DQ, but he remembered that it was a popular brand while he was a student in America, and he knew that Sea City, as well as all of Kuwait, would be a receptive market. The boss also knew that DQ had opened and closed in Kuwait, many years previously, but with the wrong local management. He was certain his team could bring DQ on line successfully.
So Tom then followed up with DQ headquarters in Minneapolis and asked for a franchise agreement. “They have 6,500 units internationally,” he explained, “and a 150-page franchise agreement, which they’ve had 70 years to perfect. We went through that document line by line.” Eventually, after 10 months, which included time for negotiations, both parties arrived at an agreement to bring DQ to Kuwait and to open 20 stores in five years.
Tom Deren’s story, and others like it, provide a good example of how the IFE is the catalyst for bringing together franchisors and franchisees internationally, as well as domestically. Had Dairy Queen missed exhibiting at IFE, the company also would have missed selling a master license in Kuwait.
While the IFE is a magnet for drawing people from all parts of the world to franchising, the show gets a huge boost from the International Buyers Program (IBP). While many international buyers arrive at the IFE independently, as did Tom Deren, most foreign buyers come as part of a delegation organized by the U.S. Department of Commerce.
The official description of the IBP from the U.S. Commercial Service says: “IBP is a joint government-industry effort that brings thousands of international buyers to the USA for business-to-business matchmaking with U.S. firms exhibiting at major industry trade shows. Every year, the IBP results in approximately $1 billion in new business for U.S. companies, and increased international attendance for participating U.S. trade show organizers.”
Arranging IBP delegations for the IFE is a huge undertaking that requires months of effort by dozens of U.S. commercial specialists located across the world. While the IFE attracts independent visitors from more than 160 countries each year, the 2016 IFE included 30 foreign delegations, with prospective buyers from Bolivia, Nigeria, China, Ecuador, Iraq, Mexico, Paraguay, Ukraine, and Spain, to name just several.
Organizing a delegation initially falls to a commercial specialist who works within the Commerce Department, but at a foreign post, such as an embassy or consulate. “Recruiting a delegation for the IFE is at least a six month effort,” explains Manal El Masry, who has recruited delegations from the United Arab Emirates for two recent IFEs. “The first step is to develop a database of all potential delegates in the country. I don’t limit the search to franchising because I’m also looking for delegates who are interested in finding new business concepts to develop in the UAE. After they learn about franchising, they may want to become a master franchisee. But this takes a lot of time.”
Building a database begins with a series of personal emails followed by phone calls and personal visits. “When I visit with the prospective delegates,” explains El Masry, “I give them the IFE show catalogue so that they can see the huge variety of companies that exhibit, as well as the educational programs.” Many foreign visitors are attracted to the IFE for the educational programs. They want to learn more about franchising even while they look at potential businesses to develop in their country.
Delegates are responsible for their own expenses when they visit IFE, but their respective commercial specialists, and IFE, treat them like VIPs. El Masry handles the hotel reservations for her delegations, for example, preferring to arrange as many details as possible to avoid confusion. Delegations vary in size from several people to several dozen people. A recent delegation from China included more than 100 delegates.
“When we arrive at the International Franchise Expo,” continues El Masry, “I meet with my delegates to discuss the specific franchise brands that interest them.” The IFE includes an International Visitors Pavilion to provide comfortable seating and food for the guests. “Using the IFE catalogue, I show the delegates where to find the booths of the exhibitors they want to see, and then I may have to assist them with translation, or to better understand the information they receive. Whatever they need, I’m there to help them.”
Helping the delegates doesn’t end with IFE. El Masry says that after some delegates return home, and as they continue to communicate with franchisors, they also keep her in the loop. In some cases the delegates arrange for visits from franchisors, and in other cases the delegates return to the USA to attend franchise Discovery Days. “It’s a long process,” says El Masry, and it may or may not end with a delegate acquiring a franchise. “These discussions can take years until everything comes together and a delegate and a franchisor make an agreement.”
Or, the discussions can take less than a year, as was the case with Tom Deren and Dairy Queen. After Deren returned to Kuwait, negotiations were intense, but they moved at a rapid pace. Deren recruited a country manager, Etienne Clement, and handed off responsibility for getting units open. Clement opened the first three DQ stores within a year of arriving in Kuwait, and established a schedule to open 17 more stores within four years, including at least two in the new Sea City.
And when Deren’s boss says, “Buy me another franchise,” Deren knows exactly where to look: the International Franchise Expo.
Tom Portesy is President of MFV Expositions, which organizes franchise trade shows in the USA, Great Britain, Mexico, and other countries.