Navigating Tariffs: Resilience is the Strategic Edge in Global Franchising

If there’s one word that defines what it takes to succeed in global franchising today, it’s “resilience.”

Right now, the pace and complexity of change and the challenge in international markets are unlike anything we’ve seen. Tariffs are back and seem to be in a constant state of flux. Politics are volatile. Local regulations are tightening. And supply chains? Let’s just say they’re not what they used to be.

Yet despite it all, global franchising continues to be one of the most powerful growth levers for U.S. brands. But its only for those who are resilient and willing to adapt, rework the model, and stay focused when others pull back.

The threat

Tariffs are making headlines more than ever, and they are eroding the margins of international franchise operations. We’ve had clients stunned by the sudden cost spikes on kitchen equipment, store fixtures, and packaging due to tariffs that didn’t exist just a year or two ago.

Resilient franchisors are meeting this challenge head-on. They’re localizing their supply chains, working with regional manufacturers, and adjusting their buildout specs to minimize exposure. It’s not always easy, but it’s necessary.

The imposition of major tariffs on other countries by the U.S. has resulted in a reluctance to do business with our franchises in some countries and by some local companies. 

Frontline concern

Geopolitical risk is no longer a footnote in your market entry analysis; it’s an up-front consideration. Nationalist policies are shifting the rules on foreign ownership and market access. Local elections can upend economic policy. Sanctions and trade restrictions are forcing brands to exit high-potential countries almost overnight. 

The lesson here? Resilience means planning for volatility and doing detailed up-front market research before committing resources. Franchisors can’t assume that what worked last year will still work next year or that what works for their brand in one country will work in others. The smartest franchises are building flexibility into their agreements and treating risk analysis as an ongoing process, not a one-time checklist.

Moving targets

Even mature, stable markets are getting tricky. The EU is pushing tight data privacy rules. Saudi Arabia and UAE have workforce nationalization policies that affect hiring. China continues to increase scrutiny of foreign businesses and intellectual property. New franchise regulations are accelerating with some clearly designed to be barriers to entry for foreign franchise brands.

This isn’t about being scared off; it’s about being prepared. Brands that succeed over the long term are those that embed regulatory intelligence into their expansion strategy. They’re working with local advisors. They’re not surprised when the rules change because they’ve built change into their model.

Currency conundrum

Let’s talk about the normally strong U.S. dollar. It’s great when you’re vacationing in Europe and not so great when your international franchisees are paying royalties in dollars while their own currencies are dropping in value or when a new international franchisee is trying to pay your initial country franchise fee.

We’ve seen promising deals fall apart because the exchange rate made them financially unviable for the franchisee. That’s a real issue that resilient brands are actively managing. Smart franchisors are negotiating currency flexibility into agreements. They’re capping dollar-denominated fees, or they’re allowing payments in local currency to stabilize partner economics. It takes effort, but it makes your system durable. It requires constant monitoring of conditions in the countries where you do business.

Bright spots

Despite all these challenges, we’re not seeing brands give up on international growth. In fact, more franchisors of all types and sizes are expanding their proven business systems into new countries than ever before. They’re just getting more strategic about where and how they expand: 

• Southeast Asia remains incredibly promising with youthful populations and increasing demand for Western brands.
• The Gulf states are pouring investment into retail, F&B, and entertainment, and they’re looking for serious franchise partners to match.
• Central Europe is showing steady growth and rising brand awareness, especially in lifestyle and service sectors.
• Latin America, while unpredictable in spots, offers strong long-term potential in Colombia, Chile, and Peru. Even in Brazil, where 95% of the franchises are local, there is good potential for foreign franchises that have clear differentiating factors and unique technology.

The opportunity is still there. But grabbing it requires a long-term mindset and a willingness to customize your approach.

Adapting

So, what separates franchises that are thriving outside their home country from those that are stalling? Here’s what we’re seeing from resilient players in today’s international landscape:

• They regionalize their operations. They’re moving their supply chain sourcing closer to the markets they serve. It reduces costs, bypasses tariffs, and increases speed to market.
• They build flexibility into their deals. Development agreements are based on milestones. Royalties are structured to adapt to currency volatility. Supply chain clauses allow for local sourcing when needed and possible as long as the franchisee maintains the level of quality the franchisor requires.
• They prioritize cultural adaptation. This goes beyond menus and signage. Resilient brands are taking the time to understand what local consumers want and adjusting accordingly.
• They invest in intelligence. Before entering a new country, they’re defining the market for their product or service, running political risk assessments, forecasting currency trends, and checking the regulatory temperature. No shortcuts. Yes, this means investment up front, but it will be cheaper than the legal fees to exit a country.
• They choose the right partners. Resilient franchisors aren’t just looking for international investors. They’re looking for operators who know the local landscape, have the right mindset, have the infrastructure and capital to start and grow the franchise in their country, and are in it for the long haul.

The real secret

Resilience isn’t just about getting through tough times. It’s a competitive advantage. While some brands pause or pull out of markets due to uncertainty, resilient companies move forward, calculated, prepared, and positioned to win. They know that downturns and disruptions eventually pass, and when they do, the brands that stayed the course come out stronger.

If you’re looking to grow globally today, your product and systems aren’t enough. You need agility in your operations, detailed pre-entry market research, flexibility in your mindset, and the resilience to ride out what you can’t control. Because let’s be honest: International franchising isn’t for the timid or for those seeking a quick sale and just up-front fees. But it’s still one of the best ways to build long-term brand value for your franchise if you’re ready for the challenge.

Bottom line

Going global with your franchise is still worth it but not for those stuck in the past. The new tariffs are raising costs. Political uncertainty is the norm, not the exception. Regulations are changing fast, and the strong dollar is pushing partners to their limits. But resilient franchisors, those who plan ahead, invest up front, build in flexibility, and stay close to their markets, are still growing, still signing deals, and still leading the way. If you want your brand to go the distance internationally, resilience isn’t optional. It’s your strategic edge.

William (Bill) Edwards, CFE, is the CEO of Edwards Global Services (EGS) and a global advisor to international businesses. With five decades of experience, Bill has helped more than 40 companies expand internationally. Contact Bill at +1 949 375 1896 or bedwards@edwardsglobal.com.