Franchise Innovation via Netchising in the Digital Economy

The essence of a successful franchise lies in managing the good relationship between the franchisor and the franchisee. In this paper the author shows that franchise innovation via Netchising, combining the power of the Internet for global demand-and-supply processes and the international franchising arrangement for local responsiveness, plays an important role in growing and nurturing such a good relationship in the digital economy. International franchising as a global growth strategy, especially in emerging markets, is gaining its popularity. For example, the U.S. Commercial Service estimated that China, having over 2,600 brands with 200,000 franchised retail stores in over 80 sectors in 2007, is now the largest franchise market in the world. Another example is that India, having over 70 international franchise operations successfully operating with an investment of $1.1 billion and sales turnover of $2.7 billion in 2009, has made franchising the second fastest-growing industry in the country. The popularity of international franchising continues to increase, as we witness an emergence of new business models in the digital economy. Specifically, the author discusses how an effective digital strategy can help a growing franchise go abroad to emerging markets through soft landings to reduce risks and costs.