...Abstract This article provides an overview of the recent literature on franchising, with special attention to management control issues. Based on an analysis of franchising articles published in twenty-five high-impact journals over the period 1996–2008, the literature is divided into the following three broad streams: franchise initiation and subsequent propensity to franchise, franchise performance and control of franchising relationships. Several research gaps and avenues for future research are identified, especially towards a systematic study of management control issues in the context of franchising relationships. Key words: franchising, literature review, management control JEL-codes: D23 – L22 – L26 – M21 – M40 2 I. INTRODUCTION This article provides an overview of the recent management literature on franchising, with special attention to its management controli aspects. Franchising plays a prominent role in business life today. This form of entrepreneurship is increasingly being adopted in a variety of sectors, especially by retailing and service companies such as McDonald’s, Holiday Inn, Body Shop and Benetton. According to the Deontological European Code of Honour (2004), franchising is a system for the sale of commodities, services and/or the application of technology. It is based on a close and continuing cooperation between juridical independent and financially autonomous companies, namely the franchisor and his individual franchisees. Hereby, the franchisor...
Words: 6954 - Pages: 28
...With your group, consider a fast food chain going into Eastern Europe. Decide on your initial level of desired international involvement and your entry strategy. Draw up an appropriate organizational design, taking into account strategic goals, relevant variables in particular countries in which you will have operations, technology used, size of the firm, and other related issues. Post your organization chart, including a description of operations and rationale. What are some of the major control issues to be considered? Your final product should be clear, detailed, and demonstrate mastery of organization structure and control systems. Scenario Assumptions An American fast-food chain plans its market entry in Russia. Country Profile – Major Concerns of a Market Entry in Russia Table 1 summarizes the main general, current opportunities and risks prevalent for doing business in Russia. Opportunities in Russia | Risks in Russia | - Russia has a population of 142.9 million. This offers a great growth potential of our customer base. (Ernst&Young, 2012) The population is broad-based, young and not picky (Wilson, 2004). | - The Russian labor market is highly segmented. Earning, income and educational inequalities are large. Additionally, the enforcement of labor standards is lax and collective bargaining is underdeveloped. (OECD, 2012) Therefore, we will need mechanisms to control their enforcement after the market entry. | - Russia is still experiencing an economic...
Words: 1974 - Pages: 8
...253–268 Franchising Research Frontiers for the Twenty-First Century Rajiv P. Dant a,∗ , Marko Grünhagen b,1 , Josef Windsperger c,2 a Michael F. Price College of Business, The University of Oklahoma, 307 West Brooks, Norman, OK 73019-4001, USA b Eastern Illinois University, School of Business, 4002 Lumpkin Hall, Charleston, IL 61920, USA c Center of Business Studies, University of Vienna, Brünner Strasse 72, A-1210 Vienna, Austria Abstract About four decades ago, during the formative years of the franchising industry, visionary authors like Oxenfeldt and Kelly (1968) and Ozanne and Hunt (1971) proposed a rich slate of research agenda which still continues to guide some of the contemporary scholarship in the franchising domain. This article (1) explicates some of the unique features of the franchising context that presumably inspired these pioneering authors, (2) discusses four established elements of ontology unique to franchising and isolates the remaining research gaps therein, (3) specifies a new slate of more contemporary research agenda for future scholarship, and (4) concludes with a brief discussion of the ten articles featured in this Special Issue of the Journal of Retailing dedicated to the theme of Franchising and Retailing. © 2011 Published by Elsevier Inc on behalf of New York University. Keywords: Franchising Research Agenda; Research Frontiers; Mixed Motives Context; Asymmetrical Power Setting; Twenty-First Century Introduction Modern franchising in USA...
Words: 11870 - Pages: 48
...INTERNATIONAL UNIVERSITY COLLEGE Sofia [Pasta Italia Franchise] Coursework in Introduction to Business Operations and Supply Chain Management Statement of originality We, the undersigned, declare that this coursework is our own original work. Student registration No: 101009 Signature: …………. 101011 Signature: …………. Program: Business Administration, Level 1 Lecturer: Deian Doikov Contents Introduction 3 Advantages of Franchising 4 Disadvantages of Franchising 5 Top 10 franchise ranking 5 Pasta Italia Background 6 Product Design 7 Service design 9 Capacity management 11 Layout planning 13 Location 15 Conclusion 16 Bibliography: 17 Introduction The aim of this coursework is to represent the role of a supportive project written by an operations management consultant with the Pasta Italia, chain of restaurant which is selling franchise shops to small business owners. Our purpose is to help prospective franchise owners to run their own business and to provide high and unchanging standards of food and service to perpetuate and to save the brand image. The coursework should be made up of five sections: 1. Product design 2. Service design 3. Capacity management 4. Layout planning 5. Location criteria We will continue the project whit explaining what is franchising, which will be followed by an explanation of every other topic mentioned above and some background of the company. Every theme will...
Words: 3490 - Pages: 14
...International franchising is often regarded as a low-risk foreign market entry strategy. Does this view fully reflect the attraction of international franchising as a market entry mode? International trade is booming and the world is shrinking rapidly due to faster communication, transportation, and financial flows. Today’s business environment is undergoing fundermental transformation as a result of globalization (Kotler & Armstrong, 2001). According to Hodgetts and Luthans (2003), “globalization is the production and distribution of products and services of a homogenous type and quality on a worldwide basis”. According to Root(1994, P.2) the new global economy has created business environment that require companies to look past the traditional thinking of the domestic market, and start looking at business from an international perspective. The main challenge of global companies is to develop managers that are capable of working across cultures and who are competent in international business (Brake, et al. 1995, p. 2). According to Elashmawi (2000), companies that want to react effectively to changes in its global marketplace, has to have a flexible and adoptable corporate culture. Want (2003) explain corporate culture as the collective belief system that people within a company has about their ability to compete in the marketplace. According to Hoffman and Preble (2004), franchising is a well working theory that helps companies adapt to different cultures and business...
Words: 3940 - Pages: 16
...International Business & Economics Research Journal – August 2009 Volume 8, Number 8 The Franchising Decision: The Perspective Of The Franchisee In The Hospitality Industry Ramon Diaz-Bernardo, Instituto de Empresa Business School, Spain ABSTRACT Franchising is a major trend in the hotel industry. Despite the fact that almost two-thirds of branded hotels in the U.S. are franchised, there is a lack of empirical research on franchising in the hospitality industry. In this article, I reviewed one of the most relevant lines of research in franchising literature, usually referred as creating franchising systems, and we have concentrated on analyzing the reasons and motivations to use franchising from franchisee perspective within the hospitality industry. The paper identifies the main reasons for choosing franchising for franchisees, explores what are the most valued characteristics of franchising, and gives some guidelines on how to make the franchising offer more appealing to potential franchisees in the hotel industry. Keywords: Franchising, Hotels, Franchisor, Franchisee INTRODUCTION A franchise system is a collaboration agreement between two independent business partners, the franchisor and the franchisee, whereby the franchisor allows the franchisee the right to use his brand name, products and services, and specific know-how in exchange for direct or indirect payments to the franchisor by the franchisee. In other words, the franchise system consists of multiple...
Words: 2612 - Pages: 11
...still be Mike’s responsibility. One bad story could damage the Bagelz reputation like it did with the company Jack-in-the-box. Legal challenges could arise if the relationship between Frank Deluca and Mike results in conflict. Irv, Bagelz’s chief bagel-maker, has two important qualities. He has 20 years experience in the business and he is an innovative person. To have an employee with such knowledge and skills is a huge benefit for the company and it will strength their competitiveness. Mike appreciates the flexibility of Bagelz’s management. Furthermore Bagelz is quick to spot and react to new market trends and direction and maybe that is one of the reason that Bagelz has got so popular and established seven retail locations in only three years in Connecticut. If Bagelz decides to franchise, the flexibility will be more restricted. To get a new idea through and furthermore to have it accepted will be a longer process under franchising. Mike took over interest in the business in 1991 in the form of a limited partnership. He has already proven that he has the knowledge and skills to run a business. Within a year Mike became full partner in the company. After negotiating for six months they have still not decided whether they should franchise or not....
Words: 1023 - Pages: 5
...right to operate a business or sell goods or services under a brand or chain name. Well-known franchise operations include McDonald's, Holiday Inns, Ace Hardware, Rexall Drug Stores, and Amway Distributors. 4) n. the right one has to operate a store or sell goods or services under a franchise agreement, as in "we have the Taco Bell franchise in our town." 5) adj. referring to a "franchise tax" which is placed on businesses (especially corporations) for the right to conduct business, as distinguished from a tax on property, income or profits tax. Source: http://legal-dictionary.thefreedictionary.com/Franchise+system According to Steven C. Michael Franchising, in which independent businesses operate under a shared trademark using a common production process, is used primarily by service businesses. It is an enduring and pervasive organisational form. As an organisational form, franchising has a large and visible presence in consumer industries such as restaurants, lodging, auto repair, real estate, hair styling, and specialty retailing, where it has captured typically thirty to forty percent of sales. Business services in which franchising is prominent include temporary employment, commercial cleaning, printing and copying, tax preparation, and accounting services. Recent areas of growth include home health care, business signage, and child development and education. Historically, franchising was introduced in the United States in the early 20th century by ...
Words: 1298 - Pages: 6
...Case # 1: A typical education franchise organization had around 80 per cent of its outlets owned and run by the franchisor. The rest were all franchise outlets or “centres”. The franchisor had set up 10 of his centres initially and run them as successful centres before venturing into franchising. The brand name was popularized initially through aggressive traffic – oriented advertising for the franchisor’s centres. Franchise centres were started initially in the territories where these centres existed, thereby leveraging the brand awareness that had already been created. The system was clearly documented in a set of seven manuals. These were the start – up, marketing, academic administration, course conduct, placement, accounts and centre management manuals. By using the manuals, know – how could be transferred easily and the centres could become operational very fast. The franchise chain grew at the rate of over 100 centres every year for five years and became the largest network of education centres worldwide. Case # 2: A leading manufacturer of cosmetics and toiletries sets up a chain of saloons under franchising arrangement. The offer document clearly mentioned that the franchisor did not have any prior experience in this business. However, in order to develop his products, the franchisor had accessed a large amount of data collected through market surveys and customer feedback. Using this data, the franchisor created hair, face and body treatment packages, which the...
Words: 1271 - Pages: 6
... the organization’s overall strategies are to launch the Pronto’s concept and adapt a company owned-and-operated model. Porcini’s is looking for new opportunities to establish its brand into new markets within the Northeast region. One of the challenges about this is that the markets for full service restaurants are nearing its dissemination point in shopping mall locations and within cities across the US. Motivated by this truth, Porcini’s is strongly considering opening limited-menu outlets at interstate highways, called “Pronto’s”. In an effort to increase their footprint, Porcini’s is considering the options of franchising, syndication, and company-ownership models, all while attempting to maintain its reputation for exceptional food and service. After a careful examination of all of the ownership models and how they affect the operations and service management for the restaurant, it is gathered that the most comprehensive model for Prontos would be syndication; primarily because it allows the restaurant to preserve its brand image and have full control of its service operations. Background Starting out in 1969 as a family-owned Italian restaurant in the Boston area, Porcini’s, Inc., soon expanded to many locations in the Northeastern United States. Known for its consistent deliverance of high-quality food and service at all of their locations, it was apparent for the restaurant to consecutively win awards like the one they...
Words: 1604 - Pages: 7
...International Marketing Management Using Business Format Franchising as a Market Entry Method McDonald’s Student Name: Nursulu Student ID: Lecturer: Dr. Lester Massingham/ Dr. Tom Abstract This report is based on the advantages and disadvantages of business format franchising and the fundamentals of market entry methods. Using McDonalds which happens to be one of the largest food service companies in the world, the author of this paper will look into the concepts of various market entry strategies in comparison to business format franchising. This report will also look into various elements that will essentially be needed to be addressed. It will critically discuss the various aspects involved in franchising as a market entry strategy and focus on how business format franchising can assessed as an expansion strategy in contrast to other modes of entry. Contents A Brief Journey into the History of McDonalds 3 1.0 An Introduction to Franchising (Facts about Franchising) 4 2.0 The Advantages and Disadvantages of Business Format Franchising 5 2.1 Marketing Franchises Vs Marketing Standalone Enterprises 7 2.2 Brand Image Transformation – Maintained Brand Equity of Franchises 8 2.2 Franchise Marketing Mix Vs Other Entry Modes 9 3.0 Market Entry Methods 10 3.1 Direct Export & Indirect Exportation 10 3.2 Licensing 11 3.3 Contracting 11 3.4 Manufacturing Abroad 11 3.5 Joint Venture 11 4.0 Conclusions & Recommendations 12 Bibliography 13 List of Figures ...
Words: 3324 - Pages: 14
... GLOBALIZATION OF HYATT PLACE1 Gevork Papiryan wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. Copyright © 2014, Richard Ivey School of Business Foundation Version: 2014-09-11 In August 2006, Global Hyatt Corporation opened the world’s first Hyatt Place hotel just outside Chicago in Lombard, Illinois. The Lombard location was the first Hyatt Place-branded hotel to open following Global Hyatt Corporation’s recent acquisition of AmeriSuites, an upscale chain of all-suite business-class hotels, from affiliates of the Blackstone Group hotel chain. The hotel corporation was scheduled to open more than 140 additional Hyatt Place hotels that year and the next in the United States as many AmeriSuites properties continued to undergo renovation and repositioning under Hyatt’s newest selectservice brand. After acquiring AmeriSuites and rebranding it, the leadership of Global Hyatt Corporation was also thinking about the internationalization of new brands. “Growth potential in the upscale limited service category is significant both in the U.S. and internationally. Hyatt will analyze opportunities for expanding the new brand in strategic markets around the world,” announced Steve Goldman, Hyatt’s executive vicepresident of acquisitions and...
Words: 3845 - Pages: 16
...A MODEL OF OPTIMAL INTERNATIONAL MARKET EXPANSION THE CASE OF US HOTEL CHAINS EXPANSION INTO CHINA E. Hachemi Aliouche, Ph.D. Associate Professor, Hospitality Management Whittemore School of Business and Economics UNIVERSITY OF NEW HAMPSHIRE, USA and Udo Schlentrich, Ph.D. Associate Professor, Hospitality Management Whittemore School of Business and Economics UNIVERSITY OF NEW HAMPSHIRE, USA ABSTRACT: Departing from the explanatory and descriptive approaches common in many of the academic studies of international expansion, this paper uses a managerial approach to develop and illustrate a process that can assist managers in the formulation of their international expansion strategies and plans. A comprehensive model of international expansion is outlined and applied to determine the optimal country to be targeted for entry by a US hotel firm and the optimal entry mode to be used. The model consists of three sections. Section One (macro assessment) identifies the major external macroenvironmental variables that determine the risks and opportunities of international expansion: market size, market growth and purchasing power; political, economic, legal and regulatory risks; and cultural and geographic distances. Through macro assessment, countries with the optimal risk/opportunity profiles are identified and ranked. Section Two (micro assessment) is applied to the optimal countries identified in Section One to estimate the potential profitability and financial value created (as...
Words: 6326 - Pages: 26
...Crayk In this paper I will be discussing my current employer, Arby's restaurant chain. I will cover a brief history of the company including its current business enivornment, the management structure, the operational and financial issues that I see as an employee of the company, and finally any potential changes that I see in Arby's future. As the low man on the totem pole of this fast food chain, I believe I have a unique perspective of the company. The goal of this paper is to provide that view to the reader. A subsidiary of Triarc Companies, Inc., Arby's Inc. is a leading global fast-food restaurant chain with more than 3,400 restaurants worldwide. Arby's is seperated in the fast-food industry by its menu, which features roast beef sandwiches. The chain expanded rapidly during the 1970s and 1980s by franchising. In 2014 the Arby's chain celebrated its 50th anniversary, and its corporate website currently boasts over $3 billion in system wide sales. Arby's brand originated from the brainstorm of brothers Leroy and Forrest Raffel. The Raffels operated a food-service equipment business in Youngstown, Ohio, in the early 1960s, and noticed the boom taking place in the fast-food industry. It had been only about ten years since Ray Kroc had purchased the national rights to franchise the McDonald hamburger operation, and Burger King was already jumping into the franchising game using a similar version of the McDonalds formula. Leroy and Forest, both in their 30s,...
Words: 1744 - Pages: 7
...McDonald’s Corporate Company Profile |About McDonald's: [pic] | |McDonald's is the leading global foodservice retailer with more than 30,000 local restaurants serving 52 million people in more than 100 countries each | |day. More than 70% of McDonald's restaurants worldwide are owned and operated by independent local men and women. | |McDonald's is one of the world's most well-known and valuable brands and holds a leading share in the globally branded quick service restaurant segment of | |the informal eating-out market in virtually every country in which we do business. | | | |Serves the world some of its favorite foods - World Famous French Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin. | | | |[pic] [pic] [pic] | | ...
Words: 2203 - Pages: 9
