More and more international franchise chains are beginning activity in Israel. They are seeking out franchisees to establish local chains which will operate exactly according to the marketing principles of the original chain. There is a vast array of companies, operating in different fields: computer companies and computer training firms, office service providers, hotel chains, real estate companies and mainly, fast food chains.
There are currently some 800,000 different franchises operating in the world today, some with thousands of points of sale. The annual turnover for franchises is some $1 trillion, and employs, according to estimates, some 8 million persons. Three quarters of all franchise businesses are concentrated in the US, where there are 570,000 points of sale, representing one-half of all retail business.
The prime motivation for awarding franchises, aside from franchiser expansion, is added value to the product. The US fast food franchise market is some $75 billion annually, out of a general franchise market of some $125 billion. Among the ten leading franchisers in the US alone, out of a total 200, are McDonald's with an annual turnover of $15.9 billion, Burger King with turnover of $8.4 billion, Pizza Hut - $5.4 billion, KFC - $3.7 billion, Hardees - $3.3 billion, Subway - $2.6 billion, and Domino's Pizza - $2.1 billion.
At a recent marketing conference in Tel Aviv, a list was distributed of 104 large US companies interested in finding Israeli franchisees. Some of those on the list are already active in Israel, while others are still looking. The following lists a number of companies who have entered, are entering or will soon enter the local market.
FUTUREKIDS - Computer Education Centers. This chain for children's computer training has begun its Israeli activity via educational centers, the first of which opened in Ra'anana. Approximately ten more are scheduled to open by the end of 1996. The chain operates on a franchise basis. FutureKids operates over 1,500 centers in 40 countries, including the Arab world.
TCBY - Frozen yogurt and cafי chain. Israeli and American investors have already received the right to import, market and establish a TCBY (The Country's Best Yogurt) chain in Israel. The franchisees are American-Israeli investor Michael Hirsch, together with Yoram Ayal and Gideon Wills. Some $1.5 million will be invested in establishing the first three branches, plus another $3 million in a distribution center, trucks, cold storage and advertising.
TCBY is the largest chain in the US marketing fat free yogurt products. The company's volume of sales reaches $1.6 billion per year. Based in Little Rock, Arkansas, the company operates over 4,000 branches in 38 countries around the world. TCBY restaurants, which are styled after ice cream parlors, are operated by franchisees.
DUNKIN' DONUTS - Lawyer Philip Rosen of New York, together with Hillel Weinberger, a vice president at investment firm Loews (which is a partner in the Renaissance Fund), have been licensed to operate Dunkin' Donuts in Israel. During the first stage, the franchisees will invest $2 million in the chain. The first branch is due to open in Tel Aviv in mid-July.
US chain Dunkin' Donuts is the largest coffee and doughnuts chain in the world, with 3,100 shops in 43 US states, 300 shops in Canada and over 800 shops world-wide. Most shops are operated by franchisees. The chain sells some 4 million doughnuts a day, and also sells coffee and other baked goods. The company's sales volume is some $1.5 billion
MAIL BOXES - MB opened its first Israeli operation one month ago in Tel Aviv's Beit Eliyahu. The Israeli licensees are the Elhadaf family, together with the Bareket company owned by businessman Dori Dankner. The franchisees intend to establish some 70 branches in Israel within the next few years.
MB is the largest business service chain in the world, offering mail , business and communications services. The company is spread out over 3,500 branches in 52 countries with an annual turnover of $1.4 billion.
WENDY'S - This US hamburger chain opened unsuccessfully in Israel several years ago, but today is interested in re-entering the Israeli market. Wendy's is considered one of the world's leading hamburger chains, with an annual turnover of $1.8 billion in 1995 on profits of $110 million.
The chain operates over 4,500 franchised restaurants throughout the world in 33 countries. In the part two years Wendy's has reclaimed its position as leader in its field.
PIZZA INN - A pizza chain based in Dallas, Texas. Annual sales turnover for 1995 was $63 million on net profits of $3 million. The company operates, either directly or through franchise agreements, a chain of pizza restaurants offering sit-down, take-out and delivery services. In addition to directly owned restaurants, the chain numbers 6,794 franchisees. Pizza Inn has not yet found an Israeli partner.