International Franchising
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Franchising has been used by many different types of companies to effectively enter new markets, or to expand their existing market share. In a franchise agreement, the franchisor provides training and the rights to a particular technique or product, and the franchisee assumes the risks (and rewards) associated with the business activity. Fast food restaurants and hotels are examples of successful franchise operations in the international market. Franchising provides participants with the opportunity to enter global markets and rapidly expanding economies, thus diversifying the risks associated with operating in only one geographic market. However, the political and economic situation in the international arena can be volatile, particularly in new economies, and many companies are wary of the risks associated with entering this market. Foreign exchange, political instability and pressure brought by the international community all have an impact on the international business environment, including franchising. This research examines the benefits and risks associated with franchising in the international marketplace.At its most fundamental level, franchising is merely "a method for distributing products or services". Franchises involve relationships between the franchisor (who provides the brand recognition and expertise in the product or service) and the franchisee, who markets the product in accordance with the franchi
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e imposed by the local government. These barriers are erected in order to keep profits from the operation from leaving the country, and also to encourage the transfer of business and technical knowledge from the franchisor to the local economy. By requiring that foreign companies have only a minority stake in companies, governments believe that they are able to prevent the outflow of resources (both technical and monetary) and encourage the development of the local economy (Amies, 2001, p. 16).
The last common type of international franchise arrangement is that of invoking the government as the local franchisee; this is essentially a special form of the master franchisee arrangement. In this arrangement, the local government exercises direct control over the operation. This may include selecting the management and employees, running the operation directly, or simply determining which local participants are selected as subfranchisees. This arrangement has been used with considerable success in China, which is not surprising given the political and economic systems in place in that country (Amies, 2001, p. 17). This arrangement provides the local government with the greatest amount of control over the activities of the franch
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Some common words found in the essay are:
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Approximate Word count = 1731
Approximate Pages = 7 (250 words per page)
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