CHAPTER 22

 Introduction
 The International Market Place
 International Franchise Evolution
 Influences on International Business
 International Marketing Decision
 Hindrances to International Franchising
 International Franchising In future
 Franchising becomes an increasing
international activities with many U.S and
Japanese Franchisors in the world.
 Several famous international franchisors are:
7-Eleven, McDonald’s, KFC, Pizza Hurt,
Teriyaky McBurger, Taco Bell, etc.
 Two important reasons for internationally
franchising:
◦ Lack of expansion opportunity in the domestic
country
◦ Growing opportunities and demand for the
franchisor’s products abroad.
 The franchisor must understand international
commercial laws, economic considerations,
political environment and the markets in
foreign countries.
 Possible factors for consideration in foreign

markets are:
◦ Disposable Income; Educational levels, cultural
differences, working force structure, working days
per week, young generations, demographics, family
structure, working women, etc
 Several patterns that illustrate the
international franchising at the present time:
◦ Foreign Hospitality Franchise (hotels)
◦ Domestic Hospitality Franchise
◦ Foreign Retail, Business Services and other
franchises
◦ Domestic Franchise
◦ Exporting Domestic Franchise
 Challenges: Legal and Trade Restrictions
◦ Tariff, Non-tariff barriers, Embargo, Foreign
Exchange Control.
 Economic factors
◦ Levels of Family income in the foreign country
◦ The country’s industrial structure:
 Developed, industrialized nations;
 Developing, Emerging, industrializing nations
 Nondeveloped, nonindustrialized nations
 Political and Environmental factors:
◦ Political stability; monetary control; government
regulations; government incentives, exchange rate
regime, etc
 Marketing opportunities in foreign countries must be
strong enough to allow entry into the international
franchising field.
 The franchisor must consider actual financial and
profitability, longevity issues before making decision
on international franchising activities.
 The franchisor must be aware of the language and
cultural differences, political policies, legal
limitations, economic conditions, the intellectual
property right protection in the foreign countries.
 The franchisor should conduct SWOT analysis in a
foreign country
 Understand applicable foreign laws and regulations
 Master Franchisees
◦ An individual, or a small business, or large corporation, or
conglomerate which assumes the rights and obligations
of establishing franchises throughout the country
◦ The Master Franchisee in a foreign country assumes the
role of franchisor. Royalty fees are generally paid by each
sub-franchisee through the Master Franchisee. The
Master Franchisee will keeps up to 50% of these royalty
payments and submit the other 50% back to the
franchisor’s headquarter.
◦ All the advertising fees are paid directly to the master
franchisee who then uses them for local (or national)
advertising.
 Other modes of entry: Joint-Ventures; Licensing;
Direct Investment; Exporting.
 Option 1: Straight Product Utilization
◦ The franchisor offers the same products in foreign
markets as they do in the domestic country.
 Option 2: Product Adaptation
◦ The franchisor offers the products that have been
adjusted to meet the local conditions and foreign
consumer demands
 Option 3: Production Invention
◦ The franchisor offers totally new products in the
foreign market.
 Promotion
 Price
 Channels of Distribution
 Franchise Organizational Structure
 Government Red-Tape
 Corruption
 High-cost of investment and operations
 Import Restrictions
 Unfavorable Tax Laws
 Hostile policies of an unfriendly country
 Name and briefly introduce the international
franchisors who have their operations in Ho
Chi Minh city.
 What business fields account for major focus

of the international franchisors in Vietnam?

Why?