The Advantages and Disadvantages of Franchising in France

2407 WordsApr 5, 200910 Pages
The Advantages and Disadvantages of Franchising in France 1 Running head: International Trade: Licensing and Franchising The Advantages and Disadvantages of Franchising in France Presented by: Deon E. Boswell Of Team McWorld University of Maryland University College AMBA606 November 4, 2005 The Advantages and Disadvantages of Franchising in France 2 Executive Summary The tremendous growth in franchising over the last decade can be traced directly to the explosion of growth in international trade and globalization. As organizations, attempt to enter new markets they are finding that direct investment via subsidiary creation is an expensive proposition and that their capital expenditures could be used for other opportunities…show more content…
Franchising and licensing, however provide an attractive alternative for companies to grow market share and revenue without the extraordinary capital expenditures. The next few pages will attempt to explain the main differences between licensing and franchising as well as the advantages and disadvantages of each. Additionally, the explanation will take into consideration the ways in which franchising is adaptable to corporate expansion in France. Franchising and Licensing Defined The line between franchising and licensing is not always clear and definitive. This is especially true when companies attempt to establish a position across international borders. There are a myriad of different laws and regulations that a firm must comply with in order to set up shop in a foreign country. Hill (2005) would say that a country.s domestic firms have a competitive advantage over foreign firms, if the domestic consumers are sophisticated, demanding, and have expectations of high standards and product quality. However, many governments, in an attempt to protect their domestic producers and the jobs they provide from foreign competition, place nontariff barriers into the market place to prevent foreign competition. As such, companies seeking to invest and expand in countries where product demand and non-tariff barriers are
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