May be fewer media and more restrictions Transport Several competitive modes May be inadequate appeal to customers in other countries. Some rudimentary aspects of international strategies mirror domestic strategies in that companies must determine what products or services to sell, where and how to sell them, where and how they will produce or provide them, and how they will compete with other companies in the industry in accordance with company goals. The development of international strategies entails attention to other details that seldom, if ever, come into play in the domestic market.
Getting Started The Pros and Cons of Franchising in China US companies must jump hurdles to operate successful franchises in China, but the potential benefits are too great to ignore.
The China Chain Store and Franchise Association CCFA —a quasi-government nonprofit membership association for Chinese and foreign retailers, franchisers, and well-known foreign brands—also formed.
The industry association now has members withoutlets across China.
CCFA has also monitored the top franchises in China to gain a clearer picture of franchise development. Inthese companies operatedfranchise stores, an increase of Franchising, a business development method for expanding a company and distributing goods and services using an established business system and a recognized brand name, has advantages and disadvantages.
On the positive side, franchises give individuals an opportunity to start a business with a proven success rate at minimal risk. The franchisor owner of the business that provides the product or service gives the franchisee independent party training, support, and marketing programs.
In addition, the business can be a highly recognized foreign brand known for quality and service. On the negative side, to open a franchise a franchisee must pay an initial fee to acquire the brand, business system, and other resources; pay on-going royalties; and follow the franchise system.
Filling consumer needs As Chinese consumers earn more discretionary income, they want the quality, brand, convenience, and service associated with Western brands. This group is largely a young, upwardly mobile, and aspirational two-income family demographic with one child and considerable discretionary income.
Food service As with franchise development in other emerging markets, food franchises first came to China from the United States.
The Yum Brands, Inc. None of these brands initially franchised their outlets in China, however; they were company-owned and operated, in some cases with a joint venture JV partner. Many other food franchises have entered and expanded in China, some of which grant a regional license to a Chinese company, which builds, owns, and operates units by itself.
Before these US brands entered China, there were few places where Chinese or foreign companies could get printing service; print shops were not fully equipped and staff did not speak English.
After a slow start, many US hotel brands have entered China—some by granting franchise licenses and some through JVs. First, hotel brands built five-star hotels for foreign business travelers in large, first-tier cities.
But in recent years, US companies have also been building hotels for Chinese business travelers in second- and third-tier cities. Customer service franchises Auto, education, and real estate franchises soon followed business services franchises.
As Chinese consumers started to buy cars, they began to need professional service centers for car repair and maintenance. Foreign franchises face opportunities… Many trends indicate that the China market is ripe for franchises. The consumer class is expanding fast. The large group of middle- and upper-class consumers can afford to buy more than basic necessities, and many members want to show their wealth through what they buy—for example, by purchasing a cup of expensive foreign-branded coffee and walking around with it.
They are purchasing big-ticket, branded items—often on their credit cards. Western brands are highly regarded.
Many consumers perceive Western brands as providing quality, convenience, and customer service. This is true especially in the retail and food sectors, where most major food franchises are either already present or are entering China see Understanding Chinese Consumers. Western franchises bring new and modern business systems.
Successful US franchises bring a complete business system, management processes, job training, and the potential for healthy and reproducible bottom line margins. US franchises in China thus have high potential to succeed. Second- and third-tier cities are open to franchising.
First-tier cities offer developed infrastructure, business-friendly governments, and a multitude of services and internationally standard amenities.
Intellectual property protection is uneven. Weak intellectual property enforcement and an inadequate legal framework are key reasons early foreign brands opened as company-owned stores or JVs, instead of franchises, in China.
Many US brands have seen local companies take their name and logo and open fake, unapproved outlets.The 4 Disadvantages of Franchising Next Article --shares; franchising comes with certain disadvantages that should be considered when deciding on a growth strategy.
1. Per-Unit Contribution. The Philippines has experienced shortage in supply of onions, a staple ingredient in many local and international dishes, pushing its prices high as local yields remain low and suspected import cartels control supply in the country, earning derision from high-ranking officials of the Department of Agriculture.
Advantages of international franchising Franchising is a unique form of business arrangement. The original company (called the franchisor) enters into a contract with a second business (called the franchisee) in which the original company offers the second business the right to operate under the original business's name and the right to sell.
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The International Franchise Association has over 1, franchisor members, representing unique business categories, listed on our site. If you are considering whether or not to go into business for yourself, but not by yourself, we are confident that you will find a number of franchise systems that might be a good fit for you.
Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchiser licenses its know-how, procedures, intellectual property, use of its business model, brand; and rights to sell its branded products and services to a lausannecongress2018.com return the franchisee pays certain fees and agrees to comply with certain.