Types of International Franchise

 

However, you'll find variations on a franchising idea which have been utilized within the international market, depending over a organization environment within a certain region. Specifically, 5 techniques are generally employed by international franchising operations: master franchisee, joint venture, licensing, direct investment and working in the local federal government as the franchisee (Chan & Justis, 1990, p. 76). Some of these (master franchisee, joint venture and working in the local government) are variations on the well-known theme of franchising.

Under a master franchisee agreement, one coordinating entity is set up which then establishes subfranchisees as well as any franchises it owns itself. The master franchisee assumes the liability, but also reaps the benefit in the association. Master franchisees usually establish a single or two stores and make certain their accomplishment ahead of expanding their operation. If the master franchisee is working with subfranchisees, this approach permits the master franchisee to develop successful procedures which can then be passed on; if the master franchisee intends to operate all stores directly, it expedites the expansion process. Master franchise arrangements are between the most well-known type of international franchising ("What is Franchising?" 2001, p. 1). The differences in between master and traditional franchising are detailed on document seven.

Under the joint venture, the franchising company works directly with local operators to develop operations. To some degree, the master franchisee arrangement is a special type of joint venture wherever the master franchisee is granted the appropriate to subfranchise any, all or none in the operation. This is not actual of joint ventures. In addition, the joint venture may well involve multiple relationships in between the franchising company along with other organizations, whereas master franchisees are granted exclusive rights to a certain country or nation (Tomzack, 1995, p. 73).

The fourth type of common franchise arrangement is that of direct investment. There can be crucial barriers to direct investment (where the franchising company directly owns subsidiaries inside target market), many of which are imposed by the local government. These barriers are erected so that you can hold profits inside the operation from leaving the country, and also to encourage the transfer of corporation and technical knowledge inside franchisor towards local economy. By requiring that foreign corporations have only a minority stake in companies, governments think that they can prevent the outflow of resources (both technical and monetary) and encourage the development of the local economy (Amies, 2001, p. 16).

Companies can a lot slow their progress and chance for accomplishment if they don't recognize that there is also substantial cultural differences among their home country and also the target franchise markets. The difficulty of cultural differences is being increasing significant as franchisors are moving from so-called Western countries (such as the United Kingdom and the United States) into developing nations. Goods and services may well have to be modified previous to they are able to be accepted in these markets, or the promotion technique itself may need to be changed.

 

 

 

Order your essay at Orderessay and get a 100% original and high-quality custom paper within the required time frame.