Best in Class International Franchise Model: Optimizing Performance for UK retailers

The proposed knowledge exchange programme, in partnership with a leading UK retailer, addresses a core business problem relating to the internationalisation of retailing. High street retailers face increasing global competition both in the UK and in international markets. Sustainable international growth is imperative for UK retailers to retain their competitive position and this has significant implications for the UK economy. In the past, the record of UK retail internationalisation has been mixed. This project will help UK firms optimize their international strategy and hence support the overall UK economy. The applied research focuses on international franchising which is an area where there is a significant gap in both business and academic knowledge. The work will benefit the user community (the partner and UK retailers generally) and will contribute to the development of new theory on internationalisation. The economic downturn in the UK has seen a renewed focus on internationalisation by UK retailers. Yet internationalisation is the sector is difficult - differences in consumers around the world usually mean the retail offer has to be adapted; the retail brand has to "work harder"; emerging markets (where the greatest new opportunities are) are generally more culturally different and inherently riskier. Retailers also need to have a multi-channel strategy and provide an integrated shopping experience across channels. Franchising is often central to retailers internationalisation strategy as it enables them to expand quickly, keeping pace with shopping mall development, provides a certain amount of local market knowledge and expertise, with a minimal amount of risk. However, retailers also want their partners in other countries to help build their brand and the extent to which they are prepared to do this is influenced by the franchise model. The aim of this research is to help the user group optimize their franchising model especially as it relates to emerging markets, specifically Russia, Ukraine, Turkey and certain areas of the Middle East. Performance comparisons will be made between franchising and other modes of international operation (wholly owned and joint venture operations). The proposed research will also benefit the academic community. Franchising can be seen as a "Cinderella" topic in international marketing and international business research, compared with the allied topics of joint ventures and strategic alliances. What literature there is in existence is predominantly USA-centric, heavily focused on franchising in the domestic market and heavily focused on restaurant and hotel franchises. The academic literature has failed to keep up with the fact that franchising is increasing in its usage by businesses and especially by retailers. While there is some recognition in the literature that franchising is a valuable means to develop a business abroad (e.g. Watson et al, 2004), what studies there are tend to treat franchising as a uniform practice and fail to take account of the specific franchise terms that can result in vastly different franchising models and hence different outcomes for the franchisor. The methodology for the applied research to be undertaken during the knowledge exchange programme uses mixed methodologies: content analysis, qualitative interviews and quantitative data analysis. The study will combine data from a range of sources including interview and survey data from partners in the emerging markets and existing company data. The work is to be managed under an existing confidentiality agreement.