Franchising - International Expansion strategies

Corporate Level Strategies

Prepared By

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Manu Melwin JoyAssistant Professor

Ilahia School of Management Studies

Kerala, India.Phone – 9744551114

Mail – manu_melwinjoy@yahoo.com

International Expansion

FranchisingFranchising is a business model in which many different owners share a single brand name. A parent company allows entrepreneurs to use the company's strategies and trademarks; in exchange, the franchisee pays an initial fee and royalties based on revenues.

Example of Franchise

• Examples of franchises

include McDonalds,

Subway, 7-11 and Dunkin

Donuts.

Licensing & Franchising

The parent company also

provides the franchisee

with support, including

advertising and training,

as part of the franchising

agreement.

Licensing & FranchisingLicensing is similar to franchising except that the franchising organisation tends to be more directly involved in the development and control of the marketing programme.

Licensing & Franchising The major drawback of

licensing is the problem of controlling the licensee due to the absence of direct commitment from the international firm granting the licence. After few years, once the know-how is transferred, there is a risk that the foreign firm may begin to act on its own and the international firm may therefore lose that market.

ExampleITC Hotels and ITT Sheraton corporation had an agreement under which ITC Hotel’s Welcom group franchised two of its hotels in Bangkok and Hong kong to ITT Sheraton holding, in exchange, the franchise for Sheraton in India. Later, partners decided to set up a joint venture with Sheraton having major stake to manage all new ITC hotel projects in India.