1 1. Research contributions to understanding franchising Frank Hoy, Rozenn Perrigot and Andrew Terry INTRODUCTION Franchising is a strategy for cloning a business through the replication of proven business and management systems. It is an increasingly popular method of business operation, providing an effective and efficient means for one enterprise, the franchisor, to expand its existing business and for another enterprise, the franchisee, to enter an industry. It provides ‘the means for merging the seemingly conflicting interests of existing busi- nesses with those of aspiring entrepreneurs in a single process that pro- motes business expansion, entrepreneurial opportunity and shared cost and risk’ (United States House of Representatives Committee on Small Business, 1990, p. 13). Franchising has its origins in the exclusive branded distribution arrangements – today referred to as product and tradename franchises – that developed in the United States in the mid-nineteenth century. It was not until the mid-twentieth century that franchising in its contemporary business format mode developed. Franchising pioneers such as Ray Kroc (McDonald’s) and Harland Sanders (Kentucky Fried Chicken (KFC)) realized that comprehensive business and management systems could be licensed as well as the right to use another’s brand in the distribution of a product or service in a territory. Today business format franchising is, in Martin Mendelsohn’s words, ‘a sophisticated business relationship whereby the franchisor provides the franchisee not only with an estab- lished branded product or service but with an entire business strategy – an overall image and a method of doing business in accordance with a proven system’ (Mendelsohn, 1992, p. 19). It has been the same franchising pioneers – McDonald’s and KFC – that have been prominent in the international expansion of franchising to all regions, and most countries, of the world. Both operate in over 120 countries through over 38,000 (McDonald’s) and 20,000 (KFC) outlets and their presence has been influential in providing the catalyst for increasingly vibrant and dynamic local franchise sectors in these countries. Frank Hoy, Rozenn Perrigot and Andrew Terry - 9781785364181 Downloaded from Elgar Online at 07/05/2020 07:08:32AM via free access