Franchising across borders: Key factors shaping global entry mode decisions

Abstract

Franchising serves as a pivotal strategy for companies venturing into international markets, balancing rapid expansion with controlled brand management. This study explores the factors influencing entry mode decisions among Spanish franchisors operating globally. Drawing on a comprehensive dataset from the Spanish Franchise Association and Tormo & Asociados, which covers 52 sectors and 305 franchise chains across 140 countries as of late 2022, the research identifies key drivers such as international experience, brand awareness, and host country characteristics, including cultural distance, geographical distance, economic development, corruption, political stability, unemployment rates, and the efficiency of contract enforcement. It also considers industry type (product vs. service). The study employs a multinomial logistic regression model to analyze how these factors shape the selection of entry modes: direct franchising, master franchising, joint ventures, and direct investment. By integrating insights from international business and franchising literature, this paper enhances the understanding of the nuanced strategies employed by Spanish franchisors in diverse global contexts. The findings offer practical implications for franchis ors seeking to optimize their international expansion strategies amidst varying market conditions and regulatory environments.