International development plan
Dunkin’ Brands (DNKN) grants rights to master franchisees to operate as well as subfranchise its brand. A master franchise agreement allows the agreement holder to develop restaurants in a region or, in some cases, throughout an entire country. Currently, Dunkin’ Brands’ main markets include Asia and the Middle East. It also has operations in Germany, China, and the United Kingdom.
The above chart shows Dunkin’ Brands’ expansion plan in the international markets as well as in the United States. As of December 2013, Dunkin’ Brands had 5,736 points of distribution (or POD) in the Asian and Australian markets. In its International Development Plan, the company plans to expand that to 9,500.
Similarly, the company plans to grow the Middle Eastern market to 2,000 units, the European market to 1,800 units, and the Latin American market to 1,400 units. In the United States, Dunkin’ plans to grow from 10,144 PODs to more than 19,500 units. As of fiscal year 2014, the Middle Eastern and Asian markets represented 21% of the company’s revenue.
Aggressive international growth
Dunkin’ Brands and restaurants such as McDonald’s (MCD) and KFC, under the umbrella of Yum! Brands (YUM), are focusing on Asian markets. Starbucks (SBUX) has been very aggressive in its expansion in the international market by growing more units outside the United States. SBUX is also included in the consumer discretionary ETF (XLY), which holds 3% of the stock. For example, in 2014, it added about 1,000 units to its international development plan. This was about twice as many as those added in the United States.