July 22, 2014

Would You Like Fries With That Picasso? The International Franchising of World Class Museums

Decades ago, profit-driven business ventures such as McDonald's paved the way for international franchising – bringing the Big Mac to over 119 countries worldwide. In the late 1940's, the Guggenheim Foundation followed suit, paving the way for the international franchising of world class museums.

In 1949, the Guggenheim opened its first international outlet in Venice, Italy, and, over the next several decades, developed an aggressive franchising model which brought the Guggenheim to such overseas destinations as Bilbao, Spain and Berlin, Germany. Other franchises in Guadalajara, Mexico; Bucharest, Romania; Abu Dhabi, United Arab Emirates; and Vilnius, Lithuania are in the works.

Much to the chagrin of art connoisseurs, this model, pegged by Time Magazine as the "McGuggenheim," is now being employed by other world-class museums and is giving the Big Mac a run for its money – literally. According to McDonald's, it costs about $1 million to open one of its fast-food franchises, a figure dwarfed by recent museum franchising deals. For example, in March 2007, France and the United Arab Emirates entered into a $1.3 billion cultural accord to open a Louvre franchise in Abu Dhabi. $500 million will pay for use of the Louvre name; the remaining $800 million will support a newly-formed French Museums Agency that will, among other things, help to develop the museum, enhance the museum's conservation department, and oversee the museum's acquisition strategy and curator training program. The Middle-Eastern Louvre is just one part of a $27 billion plan to develop Saadiyat Island – a piece of land just off the coast of Abu Dhabi – as a high-end cultural district set to house at least four world-class museums (including the Louvre and the Guggenheim).

Museum franchise deals struck by the Louvre and the Guggenheim may, at first glance, seem like a harmless way for cultural organizations to expand. Critics of museum franchising, however, argue that franchise deals are unbefitting of world-class museums, which are traditionally seen as educationally-driven non-profit organizations. Meanwhile, supporters point out that a museum's ability to serve the public rests purely on its ability to raise money – a task that may be accomplished, in part, by franchising.

Franchising cynics emphasize that the practice may jeopardize the non-profit, public service nature of museums and support this argument with the Code of Ethics for Museums (full text available at Promulgated by the Board of Directors of the American Association of Museums ("AMA") in 1993, the Code provides a series of ethical guidelines for its member museums (whose ranks include the Guggenheim) that assert the public interest nature of museums. For example, the Code specifies that museums are "grounded in the tradition of public service," "must take affirmative steps to maintain their integrity so as to warrant public confidence" and should "advance knowledge and nourish the human spirit."

Opponents also find foreign franchisees' profit-driven motives (i.e., franchisees trying to "buy" class) to be objectionable. Statements such as the one found on the "Abu Dhabi 365" blog fuel this concern. Recently, a franchise-supporter blogging about the Louvre Abu Dhabi deal wrote, "exclusiveness and grandeur have always been synonymous with Abu Dhabi and . . . the Louvre Abu Dhabi, is one more feather in the cap!" In 2005, Peter Lewis, former chairman of the Guggenheim Foundation and critic of museum franchising, went so far as to resign after a long-term disagreement with Tom Krens, the "grandfather" of the Guggenheim's franchising model, over the museum's economic growth plan. The UK's Guardian summed up Lewis' sentiments when it wrote that Krens turned the Guggenheim into a "global art circus, positioned conceptually somewhere between a casino and a department store."

Finally, critics worry that partnering with money-hungry franchisees will jeopardize the museums' artistic freedom and argue that franchising, which creates financial ties between museums and powerful foreign governments, is especially risky in the context of government-owned institutions (such as the Louvre).

Meanwhile, supporters of international museum franchising don't understand what the fuss is about. Supporters argue that museum franchising is no different than the widely-used practice of corporate sponsorship in the museum setting. Like sponsorship, franchising can bring in millions of dollars to cash-strapped museums, providing funds that can then be used to expand collections and endowments. Ultimately, supporters argue, museum franchises are simply educationally-oriented marketing opportunities being used to bring fine art to a wider class of people.

Supporters also point to the Code, which directs museums to ensure their programs are "accessible and encourage participation of the widest possible audience . . . ." This statement bolsters the argument that international franchising is beneficial and arguably supports aggressive franchising models such as the "McGuggenheim," which, in its mission statement "strives to engage and educate an increasingly diverse international audience through its unique network of museums and cultural partnerships."

With critics and supporters on two such divergent sides of the fence, perhaps a code of ethical guidelines for international museum franchising is in order? In 2001, the AMA issued its Guidelines for Museums on Developing and Managing Business Support (full text available at The Guidelines expressly recognize "[a] museum's ability to fulfill its mission and serve its public rests largely on the resources available." This recognition comes with the caveat that, when entering into business relationships, museums should "ensure that no individual or business benefits at the expense of the museum's mission, reputation, or the community it serves."

It's likely that the Guidelines will ultimately be adapted to provide direction to museums on international franchising. Such direction is probably necessary, especially considering that the recent trend in international franchising of world-class museums is gaining momentum. With proper ethical guidelines in place, who knows, one day the Louvre "brand" could become the museum-equivalent of those infamous Golden Arches.

Copyright © 2009, Sheppard Mullin Richter & Hampton LLP.

About the Author

Sheppard, Mullin, Richter & Hampton, LLP has a strong tradition of supporting the arts community. One of the firm's founding partners, Gordon F. Hampton, was a serious art collector and patron of the arts, who served as a trustee of the Los Angeles Museum of Contemporary Art and helped to found the Fellows of Contemporary Art, a non-profit organization active in promoting and funding the work of contemporary artists.

In 1999, The Gordon F. Hampton Collection was gifted to The University Art Museum (UAM) at California State University, Long Beach. The bulk of...


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