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Towards a Strategic Model of Global Franchise Expansion

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  • Aliouche, E. Hachemi
  • Schlentrich, Udo A.

Abstract

This paper develops the first global index of international franchise expansion that ranks countries according to their attractiveness to US-based franchise firms. A quantitative model combining insights from academic research and business practice generates a ranking of 143 potential expansion target countries according to their risk/opportunity profiles. The rankings suggest that countries with large markets and strong political and legal systems (large European countries, and Canada, Japan, and Australia) are the most attractive for US-based franchisors, while the small, unstable African countries are the least attractive. China (and the other BRIC countries—Brazil, Russia, India) though attractive from a market opportunity perspective, is nevertheless not highly ranked due to their significant risks and large cultural and geographic distances. This study reaffirms the importance of a strategic approach to international franchising decisions, underscores the importance of properly assessing the relative importance of key determinants in internationalization decisions, highlights the importance of a comprehensive and systematic assessment of the various risks in international franchising decisions, shows the usefulness of quantitative modeling in international franchising, and advocates the development of effective risk management methods in order to cope with rapid changes in the global marketplace.

Suggested Citation

  • Aliouche, E. Hachemi & Schlentrich, Udo A., 2011. "Towards a Strategic Model of Global Franchise Expansion," Journal of Retailing, Elsevier, vol. 87(3), pages 345-365.
    • Handle: RePEc:eee:jouret:v:87:y:2011:i:3:p:345-365
    DOI: 10.1016/j.jretai.2011.01.004
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    2. Rosado-Serrano, Alexander & Paul, Justin & Dikova, Desislava, 2018. "International franchising: A literature review and research agenda," Journal of Business Research, Elsevier, vol. 85(C), pages 238-257.
    3. José M Ramírez-Hurtado & Juan M Berbel-Pineda & Beatriz Palacios-Florencio, 2018. "Study of the influence of socio-economic factors in the international expansion of Spanish franchisors to Latin American countries," PLOS ONE, Public Library of Science, vol. 13(1), pages 1-18, January.
    4. González-Márquez, Rafael & Rosa-Díaz, Isabel María & Caro-González, Francisco Javier & Galán-González, José Luis, 2023. "Where to internationalise and why: Country selection by restaurant franchises," Journal of Retailing and Consumer Services, Elsevier, vol. 72(C).
    5. Sato, Akiko & Panibratov, Andrei, 2023. "Causal mechanisms of COVID-19 disruptive effects on liability of foreignness and the emergence of new firm-specific advantages," International Business Review, Elsevier, vol. 32(4).
    6. Jell-Ojobor, Maria & Alon, Ilan & Windsperger, Josef, 2022. "The choice of master international franchising – A modified transaction cost model," International Business Review, Elsevier, vol. 31(2).
    7. Jell-Ojobor, Maria & Windsperger, Josef, 2014. "The Choice of Governance Modes of International Franchise Firms — Development of an Integrative Model," Journal of International Management, Elsevier, vol. 20(2), pages 153-187.
    8. Moon, Sangkil & Song, Reo, 2015. "The Roles of Cultural Elements in International Retailing of Cultural Products: An Application to the Motion Picture Industry," Journal of Retailing, Elsevier, vol. 91(1), pages 154-170.
    9. Bretas, Vanessa P.G. & Alon, Ilan, 2021. "Franchising research on emerging markets: Bibliometric and content analyses," Journal of Business Research, Elsevier, vol. 133(C), pages 51-65.
    10. Liu, Wei & Denizci Guillet, Basak & Xiao, Qu & Law, Rob, 2014. "Globalization or localization of consumer preferences: The case of hotel room booking," Tourism Management, Elsevier, vol. 41(C), pages 148-157.

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