Managing the risk for international franchise expansion

Abstract

Australia has been coined the 'franchise capital of the world' (Walker 2004, p.36) because it has over three times the number of systems per capita than the United States. A leading business magazine, Business Review Weekly, describes the Australian franchising sector as 'booming' (Walker 2004, p.36). International franchising has potential to contribute to export performance, but requires a thorough understanding of the necessary capabilities. The research design uses a case research approach of leading systems, with an immediate focus on the front-end considerations of what approaches can contribute to success. Two types of international franchising strategy are proposed, namely brand-based. Subtle differences occur in the way the two systems mitigate front-end risk.