Expanding internationally is an important growth strategy for franchisors

 Expanding internationally is an important expansion strategy for franchisors Essay

п»їExpanding internationally is an important progress strategy for franchisors. Critically discuss key factors for UK franchisors if they plan to expand their very own operations international, drawing on relevant academic literary works.

Franchising can be defined as "... a process of syndication whereby one particular party (the franchisor) scholarships to a second party (the franchisee) the right to distribute goods, or carry out services, and to operate a small business in accordance with a well established marketing program... ” (Hall, 1988). Worldwide, there are above 10, 1000 franchise sites, with deal representing 10% of globe GDP. It might be said that franchising has become widely used due to the advancement what is named ‘business formatting franchising' (www.thebfa.org), this is the granting of a certificate by the franchisor to the franchisee, and allows the franchisee to transact under the transact mark or trade identity of the franchisor, whilst getting provided with constant assistance from the franchisor, in exchange helping the franchisor increase their organization.

However , you will find tensions within business structure franchising between the franchisor who have ‘... needs market standardisation' and the franchisee who ‘... demands adaptation' (Fock, 2001).

This brings very clear advantages to the franchisee, for instance , there is no need pertaining to an innovative idea, as the franchisor has recently had the theory and had it tested also. Becoming a part of a franchise, it's very very likely it will currently have a countrywide advertising campaign as well as a well-established and positive reputation. Franchisees will likely also be offered training schemes in all the business skills had to run the business enterprise. Franchisees are offered economies of scale, by simply bulk acquires, and customers are aware that franchisees are selling the best value for cash, as ultimately they are part of a much greater organisation. This reputation is known as a key thought to take into account, since this is the image the franchisor is portraying international.

From the perspective of the franchisor, the advantage of franchising is that that allows for speedy expansion within a short period of your energy, as more outlets are set up. Rapid enlargement can, however , create problems. A huge a significant franchising is a ease of entrance into market segments. This leads to a need for control and legislation, especially for dispenses looking to move overseas and into fresh countries. Alexander (1995) explored into the problems that occurred the moment selling a lot of units too quickly. Rapid development led to improved competition specifically within resorts, motels and fast foods industries, as deceitful franchisers attempted to earn a " speedy buck”. It also caused braiding agreements, local restrictions and pricing plans. Hunt (1972) on the other hand, thought that speedy expansion was making franchises more anti-competitive and also worldwide markets more challenging to enter.

Disadvantages of franchising for the franchisor happen to be that as they want to keep up uniformity inside their franchise to be able to ensure the same level of common is present, because their franchise increases, it becomes a lot more difficult to take care of the standard and level of powerful communication inside the organisation (Pizam, 2005). In addition to this, international growth of a franchise requires version of the business system, in order to meet the needs of the marketplace, such as regional tastes and various cultures. Several consumers also view franchising as a great unwelcome standardisation that restrictions choice.

Foreign franchising is among the most well-known entry mode strategies for firms to break in new marketplaces overseas. By simply leveraging the neighborhood market expertise, companies are in a position to expand in new geographic areas (www.franchisedirect.com). Market research and market progress are two main things to consider for a UK franchisor to take into consideration when thinking of operating overseas as they have to reduce as much risk as it can be, and try to ensure they...

References: Alexander, And. (1995). ‘Expansion within the Solitary European Market: a motivational structure', The Foreign Review of Retail, Distribution and Consumer Analysis, 5(4): 472–87.

Baucus, M. A., Baucus, M. H. and Individual, S. Elizabeth. (1996). ‘Consensus in business organisations: a cooperative layout among entrepreneurs', Journal of Business Going, 11, pp. 359–78.

Collins, K. (2009). ‘Exploring Business. ' UK: Pearson Higher Education. p239-241.

Cox, Juliet and Mason, Colin (2007). 'Standardisation versus Adaptation: Geographical Pressures to Deviate from Business Formats ', The Support Industries Journal, 27: almost 8, 1053 — 1072.

Dant, R. P. and Gundlach, G. To. (1999) ‘The challenge of autonomy and dependence in franchised programs of circulation – evaluation and antitrust implications', Record of Business Venturing, 18, pp. 35–67.

Eroglu, S i9000. (1992). ‘The internationalization process of franchise systems: a conceptual model', Foreign Marketing Assessment, 9(5): 19–30.

Falbe, C. M. and Dandridge, T. C. (1992). ‘Franchising as a strategic collaboration: issues of co-operation and conflict within a global industry, ' Worldwide Small Business Diary, 10(3), pp. 40-51.

Floyd, C., And Fenwick, G. (1999). ‘Towards a model of franchise system development', Worldwide Small Business Log, 17(4), 32 – forty-eight.

Fock, H. K. (2001). ‘Retail store location decision-maker: franchisor or franchisee? ', Marketing Intelligence and Planning, 19(3), pp. 171–8.

Hall, P. And Dixon, Ur. (1988). ‘Franchising', London: Pitman publishing.

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