The Internationalization Of Franchising

1. INTRODUCTION How firms continuously expand, the ways through which they accomplish this task, whether to franchise or not franchise, use wholly owned franchised outlet or franchised outlets are some of the questions that has gained much attention in the franchising literature. In this thesis we examine the factors that influence the internationalization decisions of American franchising companies. As franchise sectors matures and develop in the home market, franchisors seeking to grow must look to international markets as market saturation is ever more becoming the case for franchisors in the US, Canada, Western Europe, and Japan (Alon and McKee, 1999). Franchising is believed to be the most powerful expansion tool for firms

Subsequent research, however expanded this view arguing that firms used franchising because they needed human capital, managerial talents and local knowledge (Combs and Castrogiovanni, 1994; Oxenfeldt and Kelly, 1969; Norton, 1988). As the world continuous to evolve trends and patterns that use to govern the way people and businesses behave are changing. Thus, the traditional determinants of internationalization as discussed by prior authors and researchers seem not to hold in this day and age. As such our work is to explore new factors that are determining internationalization of franchising through the use of signals. To the best of our knowledge very little literature or research has been undertaken to use other theories to explain the determinants of international franchising hence we intend to add to existing

This paper seeks to expand on the traditional determinants of international franchising by adding signals to the interpretation of extant literature by answering the question: what are the signals that determine international franchising? The paper is divided into seven sections inclusive of this introductory section. In the second section, relevant literature is reviewed within the broader context of the existing international franchising. In section three we explain and develop the hypotheses for the study. Section four explains the research methodology used for testing the hypotheses and operationalization of measures. Section five presents the findings and results from the data analysis. In section six we discuss the findings and the final section gives a