Publication Date


Document Type


First Advisor

Grokë, Paul O.||Nelson, J. H. (Professor of business)

Degree Name

M.S. (Master of Science)

Legacy Department

Department of Business Administration


Franchises (Retail trade)


STATEMENT OF THE PROBLEM: The purpose of this study was to determine the significance of franchising on the American scene, to examine the type and extent of international franchisors, and to determine some of the requirements which should be met before franchising internationally. This investigation was completed in two steps. Chapter II which deals with the significance of franchising, was developed through a review of the available literature. A study of the literature available in the area of international marketing and foreign trade was used in the construction of the Fact Sheet Questionnaire. The third and fourth chapters present data pertaining to the type and extent of franchisors overseas and some requirements which should be met before franchising overseas. The data related to these chapters were obtained from the 14 respondents to the mail survey. CONCLUSIONS: Based on the results of this study, the following conclusions were deemed warranted. Significance of Franchising on American Scene: The evidence gained from a review of the literature available indicates: 1. The consumer, the franchisee, and the franchisor all benefit greatly from the franchise system of distribution, both domestically and internationally. 2. Franchising has increased greatly since the 1930's and is now considered an industry. 3. The franchise industry contributes sufficiently to the Gross National Product. Type and Extent of Franchisors Overseas: The findings of this investigation reveal: 1. The type of business franchised overseas varies considerably but is usually service oriented. The businesses with the greatest representation overseas were restaurants/food services and motels. 2. The capital investment reguired ranged between $2000 and $300,000 and averaged around $20,000. 3. Sales from the international franchise business amounted to a significant part of the total. 4. The typical international franchisor had been in business domestically for more than ten years and internationally for at least four. 5. The 14 respondents to the mail survey operated 13,900 franchised outlets domestically and over 1300 internationally. 6. The average franchisor did not franchise in more than five countries overseas. The countries represented most were Canada, England, and Mexico. Analysis of Some Requirements for Franchising Overseas The data based on the 14 respondents to the Fact Sheet Questionnaire indicate: 1. Five reasons were given for franchising overseas: (1) profit; (2) accessibility to market; (3) prestige; (4) low capital investment; and (5) personnel con-considerations. 2. The results of the rankings of some requirements which should be considered before franchising overseas were: A. Capital B. Selection of a representative C. Market survey D. Development of an international division E. Knowledge of customs, traditions, etc. F. Advertising and promotion efforts G. Problems of exporting and importing 3. The rankings of some of the problems that are associated with franchising overseas were: A. Selection of an overseas representative B. Market for product or service C. Acceptance of product in market D. Financing E. Remittance of profits, royalties, etc. F. Import restrictions G. Trademark infringement


Includes bibliographical references (pages 74-76).


viii, 76 pages




Northern Illinois University

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