International Franchise Attractiveness Index™

Researchers at the Rosenberg International Franchise Center (RIFC)  developed an index that ranks 131 countries according to their attractiveness as international franchise expansion markets for US-based franchises. This index is generated through a quantitative model that is based on peer-reviewed research and a survey of franchise executives. The model produces two different index rankings (Balanced Growth and Aggressive Growth) based on a company's risk tolerance levels.

Using a macro framework, the model incorporates key determinants of international market potential (market size, market growth, and purchasing power); and market risks (economic, political, legal, and regulatory risks) as well as geographic and cultural distances.  

Many of these variables are not directly observable. Therefore, the use of proxies is necessary in order to operationalize them:

Population, GDP Per Capita, and GDP Growth

A country’s market potential is proxied by the weighted average of its population size (representing the number of potential customers), its real GDP growth over the most recent five years (to capture market growth), and its per capita GDP (representing its nations’ purchasing power).

The above three measures are obtained from the International Monetary Fund’s World Economic Outlook.  

Economic and Political Risks

Economic and political risks are proxied by the Euromoney’s Country Risk Index, an index that is widely used to capture a country’s economic and political risks.

Legal and Regulatory Risks

Legal and regulatory risks are proxied by the World Bank’s Ease of Doing Business Index, an index that captures the key factors that determine the legal and regulatory risks that may face a company operating a business in a foreign country.

Geographic and Cultural Distance

  • Geographic distance is computed by taking the simple average of the target country ranking in terms of distance in miles from the franchisor host country and its ranking in terms of travel time to reach it from the host country.
  • Cultural distance is quantified by computing an index based on the differences in Hofstede’s four cultural dimensions: uncertainty avoidance, individualism, masculinity, and power distance.

A survey of more than 100 franchise executives representing franchise companies with more than 165,000 units globally helped provide the relative weights of the different determinants of franchise internationalization decisions.

Methodology

Following standard indexing methodology, country attractiveness scores are produced by computing the weighted average of all components:

Attractiveness scores are computed for 131 countries that had populations of at least one million people, and that had publicly available data. These scores are then ordered from lowest (#1 being most attractive) to highest (#131 being least attractive) to obtain the country attractiveness index.

Two sets of Indices are generated:

  1. Balanced Growth:  Relevant for companies that are seeking international franchise expansion opportunities with balanced potential risks and returns.
  2. Aggressive Growth: Relevant for companies that are willing to take significant risks in order to capitalize on large opportunities in international markets.

The methodology is described in detail in several peer-reviewed academic research papers, including:

 

2019 International Franchise Attractiveness Index Country Ranking (Balanced Growth)

2019 International Franchise Attractiveness Top 10 Country Ranking  (Balanced Growth)

 

View or download the full list of 131 countries ranked by attractiveness (Balanced Growth Model) here.

2019 International Franchise Attractiveness Index Country Ranking (Aggressive Growth)

2019 International Franchise Attractiveness Top Ten Country Ranking (Agressive Growth)

 

View or download the full list of 131 countries ranked by attractiveness (Aggressive Growth Model) here.

2018 International Franchise Attractiveness Index Country Ranking (Balanced Growth)

Top 10 Attractiveness Grid 2018
 2018  International Franchise Attractiveness Top 10 Country Ranking  (Balanced Growth)

 

View or download the full list of 131 countries ranked by attractiveness (Balanced Growth Model) here

2018 International Franchise Attractiveness Index Country Ranking (Aggressive Growth)

2018 international franchise attractiveness list of top 10 countries for aggressive growth
2018 International Franchise Attractiveness Top 10 Country Ranking (Aggressive Growth)

 

View or download the full list of 131 countries ranked by attractiveness (Aggressive Growth Model) here