It has been some time since our last blog.
This has been due to a rush by European and Asia Pacific companies to acquire licenses from US franchisors – who are most of our Clients.
The economics are simple. A US$250,000 license from a US franchisor cost 200,000 Euros in the summer of 2006. Today it costs 155,000 Euros.
The news is also good for Australian companies. The same US$250,000 license cost $330,000 Australian dollars in mid 2006 and would cost $260,000 Australian dollars today.
For Chinese investors – who are strong buyers of US franchises these days – the cost of the license has dropped 15% over the past two years due to currency appreciation.
While this is good news for US franchisors as far as up front fees are concerned, there is a down side. Traveling to Europe and Asia Pacific for negotiations, training and support costs considerably more than two years ago.
And 36 years of international experience says the dollar will come back at least some of the way towards the exchnage rates of mid 2006.
Meanwhile, it is a peak time for US franchisors to license their business model into other countries.
