How Do Franchisors Evaluate Foreign Markets?

Conclusion This article has suggested a macro environmental model of international franchising which divides the host country factors into economic, demographic, distance and political dimensions. By specifying the macro environmental variables that are responsible for choosing a host country for a franchise concept, this article can help international franchising researchers build empirical models. Furthermore, the resulting model can help franchisors evaluate and rate international locations and can produce cumulative scores that can be used as references for comparing and contrasting competing environments. The scores achieved by this model can suggest an entry strategy into the host country. Host countries with relatively unfavorable environments can be entered via low risk low involvement methods, such as master franchising. The master franchisor has responsibilities to sell the franchises in the host country, identify and qualify potential franchisees, collect franchise and royalty fees, train the franchisees, and provide supplies and support services (Justis and Judd, 1986). The entrance of many US franchisors into unfavorable or even hostile environments was often through low cost and low involvement strategies. The increased involvement of US franchisors in diverse economic, cultural and political environments has influenced their entry strategies. Consequently, most of the international franchising expansion to these countries was associated with master franchising (Arthur Andersen, 1996).