SPEECHES

Consul General Brian L. Browne

Speech

Opening Ceremony CTO2006

THEME: "Leveraging Franchising for Business Growth and National Development"

Lagos, Nigeria
Tuesday, May 16, 2006

• Honorable Ministers of Communications and Science & Technology
• Chairmen and directors of companies
• Distinguished business leaders and investors
• Ladies and gentlemen

All protocols observed
I am pleased to join you for the opening ceremony of CTO2006 exhibition. Permit me to thank all of you, especially the exhibitors and their US associates who, together with our Commercial Service and the Public Affairs Section, have made this event possible.

Last year I stood here and talked about the vital role of government in getting the economic fundamentals right to ensure an open, transparent and competitive business environment. In this vein, we all must realize that globalization and economic inter-dependence are inescapable realities. No nation is autarkic nor can any country isolate itself from these irresistible economic forces. Globalization may occasion dislocations and generate uncertainties in some quarters, yet because it is an engine of growth and creativity, it is also a net positive for those who seek to embrace it and do not retreat from it.

Consequently it is the duty of each country not only to recognize the forces of globalization, but more importantly, to deal effectively with the menu of new opportunities and issues these bring with them.

We also noted that the most basic role of government anywhere is law and order. Inherent in this precept, is respect for the basic rights of others through observance of the rule of law. There is one thing not discussed last year but which is pertinent to this seminar and the Nigerian economy, thus I will raise it today - that is the role of technology in increasing the speed and volume of transactions within the Nigerian economy.

For the moment, let me return to the rule of law because its very existence is also extremely vital if Nigeria is to make full and appropriate use of franchising arrangements. This is true because franchising is at its essence an agreement between two or more private individuals. In its most basic terms, it is a contractual agreement in which the owner of a product or service offers the right to operate and manage his product or service to another, in return for an initial fee and ongoing royalty payments. In the United States, franchising accounts for one out of every three dollars spent in retail sales and creates one out of every seven jobs in the private sector.

Franchising has become valued as an engine of growth, wealth creation and wider participation in the economy by creating a business model that lies somewhere between the extremes of complete business ownership on one hand and the classic employer-employee relationship on the other. What have made franchising arrangements popular in America are their flexibility and, more importantly, their profitability for all parties to the transaction.

What has allowed them to endure and withstand the test of time is the system's overall respect for the sanctity of contracts and the significant body of contract law dealing with franchises that has been produced because of this near universal respect for the rule of law in business transactions.

In a market economy, the commercial environment must be conducive for investment before a reasonable individual will risk his or her hard-earned capital by entering into a business agreement with another person or firm. In the case of franchising, an average agreement lasts for at least 10 years. That is a long time to be in a business relationship.

Before entering into such a long-term endeavor, that same reasonable person wants to be assured the relationship he enters into and counts on today will be the same tomorrow. He wants to know that the contract he signs today will be respected a decade from now, nothing added and nothing subtracted unless by the mutual consent of the parties. He is not looking for the perfect business arrangement because there is no such thing. What he is looking for constancy and predictability so that he can plan his future while also finding solace in the fact that as long as he honors the contract, he can resort to judicial remedies that will render him whole should the other party default.

These are the considerations that help attract and increase both foreign and domestic investment and appeal to entrepreneurs who desire to establish the long-term relationships upon which sustainable economic progress must be based.

An efficient court system - where commercial disputes are resolved quickly and impartially - bolsters the confidence of the business community. It also encourages greater investment and supports an increasing number of transactions. It deters non-performance and fraud. Efficient courts are a form of insurance for a genuine businessperson. The knowledge of their existence gives people the confidence to enter into contracts and execute deals with a wider community of business contacts - this increases the galaxy of actors and the quantity of transactions over time. This wider participation and greater activity means more wealth and growth for all concerned.

Strengthening the legal system is fundamental to improving the investment climate and to getting maximum use of franchising arrangements. Without this stability, investors will look elsewhere.

In June 2004, the United States and other members of G8, publicly endorsed the United Nations report on private sector expansion in developing countries. The G8 countries agreed to encourage and support national policies and programs that promote effective private sector-led development to help alleviate poverty, thereby helping to achieve the international development goals of the millennium declaration. The focus of this collective action is support for the micro, small and medium enterprises that are the chief source of jobs, products and services in developing countries, and indeed, in all of our economies. Rule of law and the legal and economic stability and predictability associated with it figured strongly in that report. Upon this foundation, a sound economy is built.

This brings me to the other important point I wanted to discuss - the use of technology to accelerate the speed of an individual's, a firm's or a nation's economic performance. If you review the march of economic progress, particularly the recent developments of our current technological/information age, you will see that one of the driving forces of progress and growth has been the reduction of time it takes to complete an economic activity - be it the assembly of a product, provision of a service, or the transmission of data.

In other words, speed has become increasingly essential to economic performance. Those firms and nations that embrace this postulate and maximize the velocity and volume of their transactions will prosper. Those that do not grasp this truth will lag behind. Their better days will already in the past.

Technology is key to adding speed to the economy and keeping it competitive. Franchising is likewise a viable instrument to spreading cutting edge technologies to companies and to geographic areas that heretofore have not enjoyed their usage. By offering the possibility to connect a local firm to the larger international pool of technologies, managerial experiences and financial assets, franchising can help create profitable business where none before existed. It is at this confluence where you can wed your local expertise with the resources of an international, hopefully American investor, to generate more speed and increase the number of transactions in the economy in order to spur Nigeria to new levels of growth and competitiveness.

As I conclude, I stress that the outstanding performance of US franchise concepts in over 75 industry sectors is the very reason we are encouraging Nigeria to take a keen look at this model as a potent instrument for wider economic participation and more robust private sector growth.

But for franchising to blossom in Nigeria, the fertile ground known as the rule of law must be cultivated. A contract is only as good as its enforcement mechanism - that means the courts and others dispute resolution mechanisms. Last we must explore in concrete and practical ways how we can combine this concept with your local expertise and technological skills in order to make the Nigerian economy move more quickly. The creation of skillful, responsive and adaptive SMEs will spur economic activity, provide employment and help address current gaps in Nigeria's economic performance.

To put it simply, economic transactions currently take too long to complete in Nigeria and thus there is less activity than there ought to be and the positive consequences of economic turnover are lost. By promoting the rule of law, lets enhance economic predictability, the let's also lower the average transaction time. By so doing, we take a strong step toward achieving a much higher growth rate for the Nigerian economy that will benefit the average Nigerian as well as Nigeria's partners in development.

Thank you.

 

# # # #