Franchising in Emerging Markets

In the U.S., Canada, and parts of Western Europe, retail franchising has reached domestic market saturation, while emerging markets remain relatively untapped. Retail franchises have been established in these markets primarily in the last 15 years through master franchises and corporate franchise agreements, and to a lesser extent joint venture franchising and conversion franchising (Alon and McKee, 1999; Connell, 1999; Doherty and Quinn, 1999; Hadjimarcou and Barnes, 1998; Hoffman and Preble, 2003). Emerging markets, which account for 80 percent of the world’s population and 60 percent of the world’s natural resources, present the most dynamic potential for long-term growth to businesses, in general, and to franchisors, specifically. The U.S. Department of Commerce estimated that over 75 percent of the expected growth in world trade over the next two decades will come from emerging countries, particularly Big Emerging Markets, which account for over half the world’s population but only 25 percent of its GDP.