Elements of Critical Thinking and Decision Making
The saturation of markets is the cause for many based franchisers to seek further growth in international markets; this can be an opportunity for franchisers to venture outside their domestic markets.
Because small and medium franchisers may lack in resources and capabilities, strategic alliances with foreign partners are the most viable way of establishing themselves in different markets, which is what happened to Silver Streak Restaurant Corporation (USA) in Mexico.
Since the 90’s, even with the crisis of 1994 with an important devaluation of the peso, Mexico became an interesting market because of their industrial property law, a development of trademark protection legislation, changes in the law which made it possible for small players to have the same protection as larger chains, the establishment of franchising as a viable business enterprise and legal guidelines for the provision of information prior the signing of contracts, and must important the NAFTA which put Mexico in the eyes of potential franchisors.
NAFTA entered into force on January 1, 1994, and gradually eliminated most of the tariff and non-tariff barriers to trade among its members, more than tripling cross-border movement of goods and services. Of the three NAFTA countries, Mexico changed the most after signing: Whereas NAFTA merely superseded and expanded the then-in-force Canada–United States Free Trade Agreement, it gave Mexico a new partnership with two financial giants. Mexico was coming from a planned economy with a market restricted to imports and foreign investment, and it had begun to transition gradually into an open market economy starting in the mid-1980s (Pinto, n.d.).
Regarding the advantages above, they were a reason why Silver Streak Restaurant managers’ Alan Simpson and Jerry Malachowski, when a large Mexican corporation that ensured them success in the Mexican market approached for its franchise rights in Mexico, they decided to enter this market and started to gather all their operations, procedures and policy manuals to be sure that their franchise had all the information and support necessary; so with the help of franchising attorneys, they drew up a master franchising agreement that would serve as the blueprint for future franchise operations and signed a country development agreement with the Mexican corporation.
They were confident about their drive-through or walk-up fast-food business concept in the USA, and took important decisions to ensure the success of the franchise:
• The fact that Silver Streak currently owns its restaurants, avoids the typical franchisee expenses associated with the franchise agreement per s.
• Silver Streak, is able to keep that money in the corporation, so price-wise the big fast-food chains cannot compete with them.
• Silver Streak’s target market consists of individuals that utilize the drive through of typical fast-food restaurants, (50 percent of a typical fast food restaurant’s sales rely on its drive-through operation).
• Because it mostly relies on its kind of operation, it can serve customers much faster than its competitors, always providing a high quality product.
The country development agreement they signed, allowed the Mexican partner to sub-franchise the concept throughout Mexico depending on the success of three franchised units in Juarez. However, even Silver Streak’s low cost competitive advantage and high-quality products, were not the right fit to the Mexican market, but because of their partner they developed capabilities and resources to got the things done:
• Their Mexican partner was able to obtain the land, negotiate with the various contractors for the construction of the buildings, and develop the necessary relationships with the vendors (Hadjimarcou & Barnes, 1998).
• Cultural differences between the two countries that affected the restaurant concept, so they made adjustments: o Drive-through against leisure lunch in the restaurant = larger patio eating areas. o Development of a very Mexican-like breakfast menu = “Silver burrito”.
• The resulting master franchise plan made it possible for the firm to enter this new market, with a larger, more experienced firm to “clear the way” (Hadjimarcou & Barnes, 1998).
The growth of a company in an international market depends on their mode of entry, as an alliance, subsidiary, joint-venture, or franchise and their cross-cultural adaptability. In this case Silver Streak’s growth in Mexico was because of the franchising and their view to adapt their business concept to the Mexican market.
But there are implications that result of these kinds of agreements and need to be considered, for example:
• In addition to underwriting the franchise venture and providing much needed organizational structure and operational support, the larger firm also brought considerable experience with the Mexican retail market, otherwise inaccessible to Silver Streak.
• Involvement with retail ventures such as restaurants and drive-through dry cleaning establishments in Mexico gave the Mexican firm a valuable experience edge, which Silver Streak was able to capitalize on as a result of the franchise and country development agreements.
• The larger firm also afforded a more intangible benefit by providing their experience with the Mexican business culture and the complex entanglement of political/legal and cultural factors in Mexico (Hadjimarcou & Barnes, 1998).

Therefore, it is also important to be prepared for such alliances and agreements between companies.
Bibliography.
Pinto-Leon, I. (n.d.). NAFTA: Opportunities for Solos and Small Firms. Retrieved April 17, 2015, from http://www.americanbar.org/publications/gp_solo/2011/april_may/nafta_and_you.html