March 2008 Franchising World

By Kem Pollard

When the International Franchise Association’s 2007 Chairman Michael Isakson traveled to Asia this fall for the Beijing Franchise and Conference Exposition with a delegation of ServiceMaster Clean associates, the group found cultural treasures, ancient history and a future full of promise. 

Isakson, president and COO of ServiceMaster Clean, said that the IFA chairman annually attends the conference and exposition to examine franchise opportunities in China firsthand. “I thought our domestic franchise partners would also be interested in the experience and would have a lot to contribute,” he said. “We were pleased that 15 of our franchise couples and some of our headquarters team could join us in Beijing and travel with us to Japan, as well. It was a valuable experience for all of us.”

Isakson and IFA President Matthew Shay served as keynote speakers for the conference. The group had the chance to visit with franchisees and franchisors, tour the area and observe economic and cultural conditions. Isakson also met with government officials to discuss franchising in China.

“We found a very powerful economic atmosphere with explosive growth,” Isakson said. “One good example is that the target market for our company’s services, the middle class, is thriving. In addition, a significant number of Chinese men and women now have the means to buy a franchise.”

China’s Entrepreneurial Spirit
Isakson says that economic growth has been spurred in large part by China’s preparations to host the 2008 Beijing Olympics. “There are currently about 500 franchise companies in China, and we expect that to grow exponentially over the next few years,” he predicted.

The group was interested to learn that franchise laws in China are actually very similar to those in the United States. “Of course, there are some minor differences in the laws, but not many,” Isakson explained. “Contrary to what some people may think, the Chinese government is not an obstacle in franchising. The government is actually very entrepreneurial and not very controlling.”

“In fact, our ServiceMaster franchisees on the trip were overwhelmed with the high level of entrepreneurial spirit they witnessed across the board in China,” Isakson continued. “They walked away realizing that there were very good business opportunities in the country. It was truly amazing to see how similar the issues and opportunities are in China when compared to the United States.”

Franchise Networks
“A couple of things pleasantly surprised me,” remembered Gene Rhodes, owner of ServiceMaster Quality Services in Houma, La. “One nice surprise was how many franchise networks are already set up and running in China. The other surprise was how many people there were at the convention. I think having the IFA go to China was an excellent move because the whole franchising concept is still in the infancy stages in that country. It seems to me that the franchising model has taken a good hold in China and should do nothing but get better.”

Bob Smith, owner of ServiceMaster Contract Services in St. Charles, Mo. agreed. “I was surprised by how many new franchises were there. We visited a TGIF restaurant, and the quality of food and cleanliness was exceptional. Most of the people in the places of business were bilingual. It was exciting to see the enthusiasm of the people about the prospect of owning their own businesses. When Mike and Matt spoke at the convention, it was standing room only. There are new doors opening in China.”

IFA Does its Homework
Isakson commends IFA for its work in helping U.S. franchises prepare to expand to China. “What the IFA has done in this regard has been tremendous,” he said. “This latest convention and exposition is just one example of the steps they have taken to further franchising internationally and specifically in China.” 

Over the years, IFA has worked diligently with the People’s Republic of China to help provide structure for its regulatory environment for franchising. The cooperative efforts were geared toward facilitating a stable arena for the expansion of domestic systems, as well as to ease the transition of U.S. concepts into their market. 

Several years ago, IFA began intensive efforts to establish solid relations with the Chinese government to foster the healthy development of franchising through discussions, visit exchanges, ongoing official dialogue and attendance at China’s major trade shows. In 2007, China’s Ministry of Commerce issued a new franchise regulation that supports more careful planning and measured management within the industry.

“As China embraces the concept of franchising, it is essential that mature franchise systems that have global experience show a willingness to demonstrate the benefits and opportunities that franchising offers both to entrepreneurs and to developing nations’ economies,” said Shay. “ServiceMaster’s efforts to bring a delegation of successful franchisees to China is a gesture of that dedication to advancing the cause of good business development.”

IFA is a founding member of the World Franchise Council which was created in 1994 to actively collaborate with the 33 national franchise association members to promote the global interest of franchising. The association works closely with the U.S. Department of Commerce, the Overseas Private Investment Corp. and other federal export agencies to further advocate the international expansion interests of its members. In addition to providing technical assistance and pertinent international information to its members, IFA also organizes trade missions and U.S. pavilions at selected franchise exhibitions overseas.

After leaving China, the group visited Japan where they toured Osaka and Tokyo, hosted by Duskin, a ServiceMaster partner in franchising since 1970. 

“Because of Duskin, it felt like we were coming home to Japan,” Isakson says. “You simply can’t ask for better people in terms of hospitality than Duskin. We were privileged to tour their corporate office, and to see the justified sense of pride that they have in their fine company.” 

Kem Pollard is a freelance writer affiliated with ServiceMaster Clean. For more information, contact Jennie Bledsoe, director of communications for ServiceMaster Clean. She can be reached at 901-597-7628 or jbledsoe@smclean.com.