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Introduction
The International Market Place
International Franchise Evolution
Influences on International Business
International Marketing Decision
Hindrances to International Franchising
International Franchising In future
Franchising becomes an increasing
international activities with many U.S and
Japanese Franchisors in the world.
Several famous international franchisors are:
7-Eleven, McDonald’s, KFC, Pizza Hurt,
Teriyaky McBurger, Taco Bell, etc.
Two important reasons for internationally
franchising:
◦ Lack of expansion opportunity in the domestic
country
◦ Growing opportunities and demand for the
franchisor’s products abroad.
The franchisor must understand international
commercial laws, economic considerations,
political environment and the markets in
foreign countries.
Possible factors for consideration in foreign
markets are:
◦ Disposable Income; Educational levels, cultural
differences, working force structure, working days
per week, young generations, demographics, family
structure, working women, etc
Several patterns that illustrate the
international franchising at the present time:
◦ Foreign Hospitality Franchise (hotels)
◦ Domestic Hospitality Franchise
◦ Foreign Retail, Business Services and other
franchises
◦ Domestic Franchise
◦ Exporting Domestic Franchise
Challenges: Legal and Trade Restrictions
◦ Tariff, Non-tariff barriers, Embargo, Foreign
Exchange Control.
Economic factors
◦ Levels of Family income in the foreign country
◦ The country’s industrial structure:
Developed, industrialized nations;
Developing, Emerging, industrializing nations
Nondeveloped, nonindustrialized nations
Political and Environmental factors:
◦ Political stability; monetary control; government
regulations; government incentives, exchange rate
regime, etc
Marketing opportunities in foreign countries must be
strong enough to allow entry into the international
franchising field.
The franchisor must consider actual financial and
profitability, longevity issues before making decision
on international franchising activities.
The franchisor must be aware of the language and
cultural differences, political policies, legal
limitations, economic conditions, the intellectual
property right protection in the foreign countries.
The franchisor should conduct SWOT analysis in a
foreign country
Understand applicable foreign laws and regulations
Master Franchisees
◦ An individual, or a small business, or large corporation, or
conglomerate which assumes the rights and obligations
of establishing franchises throughout the country
◦ The Master Franchisee in a foreign country assumes the
role of franchisor. Royalty fees are generally paid by each
sub-franchisee through the Master Franchisee. The
Master Franchisee will keeps up to 50% of these royalty
payments and submit the other 50% back to the
franchisor’s headquarter.
◦ All the advertising fees are paid directly to the master
franchisee who then uses them for local (or national)
advertising.
Other modes of entry: Joint-Ventures; Licensing;
Direct Investment; Exporting.
Option 1: Straight Product Utilization
◦ The franchisor offers the same products in foreign
markets as they do in the domestic country.
Option 2: Product Adaptation
◦ The franchisor offers the products that have been
adjusted to meet the local conditions and foreign
consumer demands
Option 3: Production Invention
◦ The franchisor offers totally new products in the
foreign market.
Promotion
Price
Channels of Distribution
Franchise Organizational Structure
Government Red-Tape
Corruption
High-cost of investment and operations
Import Restrictions
Unfavorable Tax Laws
Hostile policies of an unfriendly country
Name and briefly introduce the international
franchisors who have their operations in Ho
Chi Minh city.
What business fields account for major focus