International Franchising Essay

1.0 Introduction

In today’s global economy, franchising is seen as the greatest business opportunity to diversify your company into other countries. International franchising has seen considerably growth since the 1960s due to domestic market saturation, intense competition and diminishing profits found in home markets. Organizations in USA, Canada and Western Europe just to mention a few have all in recent years found themselves shifting focus to emerging economies. (Ilan Alon) Emerging markets account for approximately eighty percent of the world’s population. It is therefore not a surprising phenomenon that we find these countries as great potential for international franchising. Among these emerging economies a closer look will be given

With the travel / tourism and finance also showing great potential for international franchising. (ITA Franchising Top Markets Report, 2016)

3.0 Contribution of Franchising

Franchising as a business model has been predominant in India for a long time this is due to shifting consumer trends towards branded products; global exposure and the use of international brands has actively contributed to the growth in franchising

A current report from KPMG and Franchise Association of India (FAI) indicates that, India’s franchise economy has the potential to grow from its current $13.4 billion to $51 billion in 2017 and 4% in the country’s GDP. (ITA Franchising Top Markets Report, 2016)

A report by the franchising association India probes on the fact that franchising contributes to the economic growth of the nation in divers ways such as, access to necessary goods and services and expansion of a country's tax base. In the case of India franchising has been growing at a remarkable rate since 2008, as risk-averse Indian entrepreneurs deem it to be the most viable option to tapping the nation's vast consumer

Franchising as a business model is also well suited for the average business oriented people as it fulfills their love for ownership and control of business operations and they being family-oriented, finds it an attractive plan to pass on the business to future generations. (Yoginder Pal, 2006)

International franchising provides employment and income for their employees in the host country, in the sense that cost and availability of supplies most often drive franchisors to source locally, which can increase the positive economic impact on India. (Ilan Alon, 2004)

Another important contribution of franchising is the tax revenue that can be generated from it. Raising taxes helps emerging markets like India develop their physical and institutional infrastructure as local companies pay less as compared to international companies since these companies are viewed as efficient and profitable.

Furthermore, with a competitive domestic franchising environment, India can revive the service sector and its supporting industries as these sectors contribute a large percentage in the GDP of a country and have a balance of payment surplus in services like the United