Using Franchising Tool as a Growth Strategy by US Food Chain Franchisors - A Case Study of Food Chain Franchises in the Middle East

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CONTENTS

CHAPTER 01 INTRODUCTION3

1.1Background of the Problem3

1.2Statement of the Problem4

1.3Purpose of the Study4

1.4Research Questions5

1.5Definitions of Terms5

1.6Limitations of the Study6

1.7Theoretical Framework6

1.8Organization of the Study6

CHAPTER 02 LITERATURE REVIEW8

2.1Franchising8

2.2Franchising: Overview of Prior Research10

2.3Review of the Fast-Food Industry10

2.4Franchising Growth12

2.5Reasons for Growth in Franchising in the US13

2.6Franchising in the Middle East14

2.61Dubai- Leading the Way15

2.62Dubai- Cultural and Social Sensitivity16

2.63Facts of Franchising in the Middle East17

2.7Opportunities for US Fast Food Chain Franchisors19

2.8Summary21

CHAPTER 03 METHODOLOGY26

3. 1Social Constructivist Theory26

3. 2Research Design28

3. 3Research Technique and Process29

3. 4Research Methods29

3. 5Participants30

3. 6Research Instrument30

3. 7Ethical Concerns30

3. 8Quality and Verification31

3. 9Reliability/Dependability32

3. 10Validity34

3. 11Confidentiality36

CHAPTER 04 PROPOSED DATA ANALYSIS38

REFERENCES40

APPENDIX A45

CONSENT FORM45

CHAPTER 01 INTRODUCTION

Background of the Problem

Franchisors use different resources (Spinelli, 2007) and adopt various strategies (Preble & Hoffman, 2006) to establish successful franchise systems in emerging markets (Khan, 2005). Under the resource-based school, the competitive advantage of a company is established through an accumulation of unique resources, capabilities, and knowledge (Cater & Cater, 2009). These resources are strategically aligned with the company's core capabilities and competencies to produce a better product or a different product to satisfy consumer needs. By combining resources, capabilities, and competencies, company managers can make superior products thereby establishing a unique place in the market. Increased market share is developed through the continual supply of better-valued products to the market (Smith, 2008). In order for smaller companies to survive in competitive environments, managers need to identify the firm's unique resources. The managers of smaller companies also need to strategize based on these resources to provide a foundation for sustainable competitive advantages. Small business owners should also recognize the potential value of their non-monetary resources (Runyan, Huddleston, & Swinney, 2007).

Chan and Justis (1990) studied the potential for franchising in Asia. The study found that the economic growth in the Asian Pacific region presented huge amount of opportunities for the U.S. franchises. The study also suggested several franchising strategies that can be adopted by firms in the East Asia. These strategies include the establishment of a master franchisee, licensing, joint venture, direct investment and establishing a franchising agreement with the local government as franchisee. Chan and Justis (1990) suggested that these strategies can be adopted by US firms to expand into East Asia. However, firms must understanding the local culture and foreign regulations before moving towards franchising. The current study will also examine the suitable franchising strategies that can be adopted by US firms as a growth strategy into the Middle East.

Statement of the Problem

Franchisors have expanded into the emerging markets of different continental regions that has accounted for a significant portion of the international expansion of franchising (Alon, 2004). American multinational company leaders have been using franchising as an entry method to expand their businesses across international borders (Preble & Hoffman, 2006) into emerging markets (Cochet, Dormann, & Ehrmann, 2008) particularly those firms in the fast food industry (Doherty, 2007; Duckett, 2008). In some emerging countries, franchising is welcomed by governments ...