With saturation in their traditional markets, emerging markets offer some real opportunities for franchise systems today. Saying that, is penetration of the emerging markets easy? Are companies guaranteed success if they open locations there? Hardly.

Not every company will do well in the emerging markets, any more than every company will do well in the “traditional” markets. First of all, there is no such thing as a single profile for any of the emerging markets. They are not fungible, and companies need to understand that ethnic backgrounds, consumer preferences, economic conditions, local competitors, real estate, and community support among a host of other variables must be evaluated.

But a strong opportunity exists. There is a rapidly expanding minority middle class with a dramatic increase in the number of African-American, Hispanic, Asian, and new immigrants entering the workforce and achieving management positions and wealth. Working with clients and government in establishing emerging market opportunities, my firm uses a tool called a “leakage analysis” to measure local demand for products and services. Our studies often find that for certain products and services, some emerging markets often have higher sales potential than suburban markets.

If the demand is there, why are these markets still relatively underdeveloped for branded retailers and service providers? The answer is really quite simple: Other opportunities seemed better. Expansion was booming and except for the fast feeders, most branded chains took the easier path and avoided the inner cities. Companies also avoided these markets because of the perceptions, the fear of crime (which has dropped dramatically as the economy has improved), possibly some underlying bigotry, and a reality that potential franchisees for these opportunities were not as easily available as in the suburbs. The