The selection of international retail franchisees in East Asia

Abstract

PurposeAlthough international franchising has occurred in East Asia over the past 20 years, surprisingly very little academic research has been undertaken to understand key dynamics of this marketing phenomenon. The purpose of this paper is to examine franchise resources, which is a key construct in the internationalization of retail franchising.Design/methodology/approachA multiple case study approach has been adopted to generate rich data designed to aid understanding of the complexities inherent within such an international marketing relationship. The data were drawn from five US food service retail franchises, which are household brands across East Asia, operating in Singapore.FindingsThis study presents several interesting findings for the retail franchise industry. First, consistent with resource scarcity theory, international franchising relationship begins with a high degree of franchise dependency on the local franchisees. Next, international franchisors will be well served to select their overseas franchisees with strong financial resources to engage in rapid expansion, good contacts to secure early stores in prime retail locations and well‐proven local knowledge to modify the concept to suit particular market needs.Practical implicationsFindings from this study have important managerial implications for international retail franchisors on how to effectively select franchisees to successfully launch and manage their brands in East Asia.Originality/valueThis empirical study has made a major contribution in adding to the limited body of empirical knowledge on franchisee selection in international retail franchising, particularly in East Asia. It is hoped that this paper will encourage more academics to investigate why certain international retail franchise concepts perform relatively better in East Asia than others.