The Importance Of International Franchising

1405 Words6 Pages
Number of franchised units, Number of company owned units, Royalty fees, Geographical scope, Investment Number of franchised units, Royalty fees, Number of company owned units, Age, Total Units, Franchise experience Initial Support, Earning Claims, Franchise experience, Total unit growth, company owned units, Chain size Franchising is one of the entry modes that companies use when they desire to enter to other markets and it is defined according to the level of risk and control that the firms can or want to have on their operations. Welch, (1990) identifies “direct stimuli”, which he defines as when third parties, such as local companies from the hosts markets make contact with the potential franchisor firm. Another direct stimulus is market…show more content…
Axinn, (1988) states that the relationship between management attitude towards internationalisation should not be undervalued. In her research, she found out that the single most important indicator of firm expansion performance was due to the manager’s attitude towards international operations. Zhu et al., (2011) expressed in their work that international franchising system life cycle is another determinant and the life cycle was divided into penetration, expansion, maturity, and late maturity. They stated that once the franchise system in the home country reaches a maturity state franchisors start to exploit international markets. Also, the international business experience is an important factor that affect international franchising with the greater the experience the greater the level of internationalisation. Elango (2007) research on internationalisation also pointed to the fact that the monitoring experience of the franchisor also contributed to the franchisor's ability to operate internationally. Zhu et al., (2011) argued that the country risk, location familiarity which consist of physical and cultural distance also determine international…show more content…
According to Hodson (2012) the Australian franchising market has been growing rapidly over the last five years, and as such many of the businesses are rapidly nearing, or have already reached the critical mass that is arguably necessary for a stock exchange listing. Even though, franchisors are very skeptical about listing on the stock market, listing has numerous benefits for firms such as an aggressive growth paths ranging from access to equity capital to fund expansion and acquisition, to extracting a percentage of value from the years invested in building the business, whilst still retaining in control. Furthermore, Hodson (2012) stated that there is a powerful and often underestimated benefit of listing which is the ability for the franchisors to retain franchisees and employee’s due to higher public profile as well as the ability to offer unique remuneration structures whiles using the listed company’s
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