Looking Toward the Future: U.S. Expansion Has Its Challenges

2017 NextGen in Franchising Global Competition social franchise winner offers advice to international concepts looking toward expansion into the United States.

By Alejandro Souza

Expanding a franchise concept overseas is as much about timing as it is about where you grow. As the founder of a Mexico City-based pizza concept that sources its ingredients locally and also acts as a social enterprise -- Pixza --  I recognize that my business has the potential to flourish in the U.S. It’s a market where consumers have a growing appreciation for supporting both local farmers and their local communities.

When I arrived at the IFA Annual Convention in late January for the 2017 NextGen in Franchising Summit, I was excited about the opportunity to network with and learn from franchise executives that could shed more light on the nuances of expanding to the U.S. I had lived in the U.S. for 15 years, completing both my undergraduate and graduate degrees on opposite coasts, so I was familiar with American culture and consumer behaviors prior to entering the NextGen in Franchising Global Competition. But now as a business owner looking toward U.S. expansion, I realized I had more to learn about initiating and exercising business affairs within the country.

Particularly, I learned that timing is everything, especially in a franchise model where I could potentially put more than just my business at risk. I could potentially put the businesses and livelihood of my franchisees at risk, as well. Although expanding locally within Mexico is a natural first step, international expansion, particularly to the United States due to the presence of a significant Mexican diaspora in addition to the U.S.’ general knowledge and acceptance of Mexican cuisine, is also a strategic and feasible option. 

If expanding to the United States were to become a reality, three main hurdles would have to be overcome: the ability to successfully replicate and apply Pixza’s social mission, sourcing of raw materials, and political immigration concerns.

Does my business’ mission resonate with the U.S. population?

At Pixza’s core, we are a social empowerment platform. For every five slices of pizza sold, a sixth slice is delivered automatically to homeless young adults who they have the chance to join our program, “The Route of Change.” Those who graduate from the program receive a job offer from their local Pixza restaurant, as well as an opportunity to live in their own apartment and work with a personal coach in order to establish and implement a life plan.

The ability to successfully replicate and apply Pixza´s central social empowerment platform within the U.S.’ different social and cultural context is a significant obstacle. In contrast to Mexico´s homeless population that disproportionately affects young adults ages 18 to 25, the homeless population in the U.S. mostly affects adults ages 45 to 70 with a different background of psychological ailments.

Because the homeless population constitutes an important percentage of Pixza´s human resources, it proves crucial to ensure that the same social empowerment program that has already proved to empower young adults can also serve, employ, retain, and inspire an older population facing different challenges. Just as it occurred in Mexico, Pixza will have to establish key strategic alliances and partnerships with local expert players in the field to ensure that a sound, empathetic, and realistic intervention will indeed respond to the needs of the U.S. homeless population.

Can I source my materials abroad while maintaining the same product quality I’ve established at home?

Pixza offers the world’s first blue-corn pizza made from 100 percent Mexican ingredients. Our biggest challenge in expanding to the U.S. will be identifying if and how to best secure authentic, organic, and non-GMO blue corn in addition to the diverse ingredients needed to make the 21 different pizza varieties that comprise the menu. In addition to existence, availability, and distribution of essential raw materials and ingredients, the price of these will also play a critical role toward determining final menu options and the geographical location of units. If unable to source the same ingredients, Pixza´s menu could evolve and change to represent U.S.-focused flavors. It’ll be key to find to the right balance between the use of local ingredients and the enforcement of Pixza´s original value proposition so as to maintain the product´s key differentiators.

How does the current U.S. immigration climate affect my ability to expand?

The current administration’s immigration agenda leaves Mexican citizens highly vulnerable when it comes to conducting business with the U.S. As a result, securing the necessary work or investment visas and associated clearance is paramount. In the off-chance they were to be secured, however, ensuring that their legitimacy will be respected and not revoked in the near future remains far from a safe bet. Navigating this complex and continuously evolving political immigration context is a key concern when trying to establish Mexican-led entrepreneurial endeavors and investments in the U.S.

Although complex and difficult to navigate, the notion of expanding into U.S. territory remains an enticing and feasible growth strategy for Pixza's movement of integrated prosperity.

Alejandro Souza is the founder of Pixza, a social franchise concept based in Mexico City. He was the social franchise winner for the 2017 NextGen in Franchising Global Competition.