Franchising Globally: Innovation, Learning and Imitation

268 Pages·2010·3.586 MB·English

by  Ilan Alon (auth.)

Franchising Globally
Also edited by Ilan Alon
Authored Books
GLOBAL MARKETING (With Eugene Jaffe) (Forthcoming)
SERVICE FRANCHISING: A Global Perspective
THE INTERNATIONALIZATION OF U.S. FRANCHISING SYSTEMS
Reference Books
A GUIDE TO TOP 100 COMPANIES IN CHINA, SINGAPORE: World Scientifi c
(With Zhang and Wenxian) (Forthcoming)
BIOGRAPHICAL DICTIONARY OF NEW CHINESE ENTREPRENEURS AND
BUSINESS LEADERS (With Zhang and Wenxian)
Edited Books
CHINA RULES: GLOBALIZATION AND POLITICAL TRANSFORMATION (With
Julian Chang, Marc Fetscherin, Christoph Lattemann, and John McIntyre)
THE GLOBALIZATION OF CHINESE ENTERPRISES (With John McIntyre).
THE NEW GLOBAL SOCIETY, series editor,
1. GLOBALIZATION AND DEVELOPMENT (Eugene D. Jaffe)
2. GLOBALIZATION AND HUMAN RIGHTS (Alma Kadragic)
3. GLOBALIZATION AND LABOR (Peter Enderwick)
4. GLOBALIZATION AND POVERTY (Nadejda Ballard)
5. GLOBALIZATION AND THE ENVIRONMENT (Howon Jeong)
6. GLOBALIZATION, LANGUAGE, AND CULTURE (Richard Lee)
BUSINESS AND MANAGEMENT EDUCATION IN CHINA: Transition, Pedagogy
and Training (With John R. McIntyre)
BUSINESS AND MANAGEMENT EDUCATION IN TRANSITIONING AND
DEVELOPING COUNTRIES: A Handbook (With McIntyre, John R.)
BUSINESS EDUCATION AND EMERGING MARKET ECONOMIES: Perspectives
and Best Practices (With John R. McIntyre)
CHINESE ECONOMIC TRANSITION AND INTERNATIONAL MARKETING
STRATEGY
CHINESE CULTURE, ORGANIZATIONAL BEHAVIOR, AND INTERNATIONAL
BUSINESS MANAGEMENT
INTERNATIONAL FRANCHISING IN INDUSTRIALIZED MARKETS: Western and
Northern Europe (With Dianne Welsh)
INTERNATIONAL FRANCHISING IN INDUSTRIALIZED MARKETS: North America,
Pacifi c Rim, and Other Developed Countries (With Welsh, Dianne)
INTERNATIONAL FRANCHISING IN EMERGING MARKETS: China, India and
Other Asian Countries (With Dianne Welsh)
INTERNATIONAL FRANCHISING IN EMERGING MARKETS: Central and Eastern
Europe and Latin America (With Welsh, Dianne)
Franchising Globally
Innovation, Learning and Imitation
Ilan Alon
George D. and Harriet W. Cornell Chair of International Business, Director, The
China Center at Rollins College, Rollins College, Florida, USA
© Ilan Alon 2010
Foreword © James G. Combs 2010
Softcover reprint of the hardcover 1st edition 2010 978–0–230–23828–2
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in accordance with the Copyright, Designs and Patents Act 1988.
First published 2010 by
PALGRAVE MACMILLAN
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registered in England, company number 785998, of Houndmills, Basingstoke,
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ISBN 978-1-349-31544-4 ISBN 978-0-230-28985-7 (eBook)
DOI 10.1057/9780230289857
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources. Logging, pulping and manufacturing
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country of origin.
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Alon, Ilan.
Franchising globally : innovation, learning and imitation / Ilan Alon.
p. cm.
Summary: “Franchising Globally is first of its kind to examine franchising
both from an entrepreneurial and from an international perspective. The
book includes theoretical discussions and practical examples of international
franchising as well as both micro and macro studies of franchising
environments in different parts of the world” – Provided by publisher.
Includes bibliographical references and index.
1. Franchises (Retail trade) 2. International trade. I. Title.
HF5429.23.A375 2010
658.8(cid:2)708—dc22 2009048423
10 9 8 7 6 5 4 3 2 1
19 18 17 16 15 14 13 12 11 10
Contents
List of Illustrations vii
Acknowledgments x
Foreword xi
Notes on Contributors xiv
Introduction 1
Ilan Alon
Part I Franchising Approaches and Frameworks
1 Franchising in Emerging Markets 11
Ilan Alon, Dianne H.B. Welsh, and Cecilia M. Falbe
2 Franchising as an Entrepreneurial Form 36
Ilan Alon and Marc Sardy
3 Internationalization of Franchising 54
Ilan Alon, Liqiang Ni, and Raymond (Youcheng) Wang
4 Clustering for International Market Selection 73
Ilan Alon and Amir Shoham
Part II Area Studies of Franchising
5 Franchising in Italy 93
Ilan Alon and Donata Vianelli
6 Franchising in Morocco 120
Ilan Alon and Rachid Alami
7 Franchising in Croatia 138
Ilan Alon, Mirela Alpeza, and Aleksandar Erceg
8 Microfranchising in Less Developed Countries 155
Ilan Alon, Matthew C. Mitchell, and J. Mark Munoz
Part III International Franchising Cases
9 Ruth’s Chris Franchises Expand Internationally 183
Ilan Alon and Allen Kupetz
v
vi Contents
10 International Franchising at Best Western 193
Ilan Alon, Gérard Cliquet, Matthew C. Mitchell, and
Rozenn Perrigot
11 San Francisco Coffee House Opens in Croatia 211
Ilan Alon, Mirela Alpeza, and Aleksandar Erceg
12 An Athlete’s Foot Master Franchisee in China 224
Ilan Alon
13 Final Reflections 238
Ilan Alon
Index 247
List of Illustrations
Tables
1.1 Summary of U.S. published articles on
franchising in emerging markets 23
2.1 Comparison of PSED findings with Knight (1984) 42
2.2 Summary of findings 43
2.3 Logistic differences between nascent entrepreneurs
and franchisees 46
A2.1 Summary of results of critical variables 50
3.1 The hypotheses, variables, and definitions 62
3.3 Sample correlation coefficient matrix 63
3.2 Summary statistics of variables in data analysis 63
3.4 Coefficient estimation of the logistic regression model 64
4.1 Countries by cluster 80
4.2 Clusters mean 85
4.3 Distances between cluster centers 86
5.1 The internationalization of hotel groups:
Selected research studies in the last decade 95
5.2 Largest (20) hotel groups in the world by
number of hotels/number of rooms (2003) 98
5.3 Tourism destinations in Europe:
Italy and its main competitors 104
5.4 The research questionnaire 105
5.5 Organizational modes of the main hotel groups in Italy 107
5.6 Internationalization of Italian hotel groups 108
5.7 Main international hotel chains operating in
the Italian market 109
5.8 Cultural indices and cultural distance from Italy 110
6.1 Morocco PEST analysis 124
6.2 Advantages of the franchising format 125
6.3 Influencing factors that lead to an entry mode 127
6.4 Summary of company information 130
6.5 Comparative study between McDonald’s
and Subway’s services and products 131
6.6 Comparison between McDonald’s and
Subway’s strategies and against theory 132
vii
viii List of Illustrations
7.1 Major assumptions and predictions about franchising
according to resource scarcity and agency theories 140
7.2 GDP per capita and growth rates for
Croatia over the period 2001–2006 142
7.3 Unemployment rate in Croatia 2001–2006,
by International Labor Organization 142
7.4 TEA indexes for Croatia (2002–2006) 143
7.5 Entrepreneurial capacity of the Croatian economy, 2006 144
7.6 Expected competition intensity, 2006, percentage
(how many entrepreneurs offer the same product?) 144
7.7 Comparison of the number of franchises in
Croatia and selected European countries 147
7.8 Major opportunities and threats for
franchise development in Croatia 150
7.9 PEST analysis of the major environmental factors
influencing franchise development in Croatia 151
A7.1 Questionnaire used for the survey purposes in
“Franchising development perspectives in
Croatia” research 153
8.1 Commonalities between franchising and
microfranchising characteristics 172
8.2 Commonalities between franchising and
microfranchising success factors 173
8.3 Microfranchise success factors (based on priority) 174
9.1 Ruth’s Chris restaurant growth by decade 187
9.2 Meat consumption per capita (in kilograms) 189
9.3 Country data 190
10.1a Estimated share of global tourism revenue and
travel activity by region (2009) 195
10.1b Share of international travelers by global subregion 195
10.2 Top ten hotel groups worldwide (in rooms) 197
10.3 Top ten hotel brands worldwide (in rooms) 198
10.4 Best Western Hotels Worldwide 199
10.5 The percentage of sales coming from
overseas (1999–2001) 200
10.6 Historical summary of the
international expansion of BW hotels 205
11.1 Basic socioeconomic data on Croatia 215
11.2 Foreign franchisors in Croatia 219
11.3 Domestic franchisors in Croatia 219
11.4 SFCH financial performance 222
List of Illustrations ix
12.1 Consumption of recreation goods in
entertainment and sports sector, 1997–2003 232
Figures
1.1 Global consumer markets 17
2.1 Nascent entrepreneur vs. franchisee components of
differences and similarities 41
3.1 IE vs the single index 65
3.2 IE vs U.S. scale with a lowess smoothing curve 66
5.1 Franchising as a mode of entry in the Italian market:
An analysis framework 106
6.1 Number of franchises in Morocco 1990–2008 122
6.2 Dimensions of culture 128
6.3 Factors in Subway’s mistakes 133
6.4 Adjustments to visible/invisible criteria 134
6.5 Proposed business framework for fast-food companies
to be successful in the Moroccan market 135
7.1 Franchising Stakeholders’ Perceptions 149
8.1 Model for microfranchise implementation (MMI) 175
9.1 Fine dining steak houses by brand in the
United States (2005) 185
9.2 USDA Prime Cuts of Beef 186
9.3 Ruth’s Chris locations in the United States (2005) 187
9.4 Restaurant Growth Paths 188
11.1 The interior and exterior of the SFCH, Osijek 213
12.1 Countries where the Athlete’s Foot stores are located 226
12.2 Offshore franchise retail model 231
12.3 Franchise structures of the Athlete’s Foot in China 234
13.1 Conceptualization of international franchising 239
13.2 Service franchising: a conceptual framework 239