Franchising as an Entry Strategy
15.4 Understand franchising as an entry strategy.
Franchising is an advanced form of licensing in which the focal firm, the franchisor, allows an entrepreneur, the franchisee, the right to use an entire business system in exchange for compensation. As with licensing, an explicit contract defines the terms of the relationship. McDonald’s, Subway, Hertz, and FedEx are well-established international franchisors. Others that use franchising to expand abroad include Benetton, Body Shop, Yves Rocher, and Marks & Spencer. Franchising is common in international retailing. However, some retailers such as IKEA and Starbucks favor direct investment and internationalize through company-owned outlets. Ownership provides ...
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