Franchising in global markets: towards a conceptual framework

When is franchising the appropriate organizational form for implementing marketing strategy in global markets? In this paper we identify conditions under which franchising facilitates efficient transactions globally with the help of constructs from transaction cost analysis, agency theory, and franchising research in domestic contexts. Some bases for setting initial fees and royalty payments as well as the rationale for establishing master franchises are also explored. The advantages and limitations of adopting franchising as the mode of operation in global markets are briefly discussed. A conceptual framework that provides an integrated multidisciplinary approach for studies of franchising from a global marketing perspective is developed.