International franchise presence and intensity level: profile of franchisors operating abroad

Abstract

Purpose: This paper aims to identify the driving variables in the franchise decision to expand abroad. It also explores the effect of a set of factors on the intensity of the internationalization process pursued by franchise companies. To achieve this goal, the author considered the following variables: the role of management and franchising experience, brand awareness and the sector of activity (product versus service). The international franchise ratio and the size of the chain were also considered.

Design/methodology/approach: This study uses a quantitative approach applied to the Spanish franchise system, which occupies the second position in Europe in terms of the number of franchisee outlets (65,810) and the first position in Europe in terms of the number of franchisors (1,232). Moreover, in early 2016, a total of 302 Spanish chains were doing business in 137 foreign countries with 20,891 outlets established abroad. Data were obtained from secondary sources (i.e. the Spanish Franchise Association, the leading Spanish franchising Consultant Group, etc.) The most important international franchising associations were also considered. Multiple regression analyses were used to test the research hypotheses.

Findings: Results conclude that that franchisor’s brand awareness plays an important role in the decision of becoming a global franchise chain. In addition, the franchising experience, business orientation (product versus service), the international franchise ratio and the company size have significant impacts on the intensity of the internationalization process pursued by the franchisors.

Originality/value: The scant attention given to this topic has usually been examined from the US and British base and has focused on a reduced number of sectors of activity such as hospitality and manufacturing doing business in a single region (i.e. developed or emerging nations). To fill this gap, this work analyzes the international spread of the entire Spanish franchise system, which in early 2016 had presence in 137 foreign countries and operated in a total of 52 different sectors of activity.