Vol. 3, No. 1; February 2011
Reinventing Business Growth through Franchising in Developing Economies: A Study of the Nigerian Fast Food Sector Olafemi Ayopo Olotu (PhD) Lecturer, Department of Marketing, Rufus Giwa Polytechnic, Owo, Ondo State, Nigeria P.O. Box 007, UST, Port Harcourt, Rivers State, Nigeria Tel: 234-805-665-9371 E-mail: firstname.lastname@example.org
Folorunsho Awoseila Lecturer, Department of Marketing Rufus Giwa Polytechnic, Owo, Ondo State, Nigeria Abstract Business generation has taking a new dimension in the developing Nations considering the inflow of Foreign Direct Investment (FDI) through the process of Franchising. This study therefore examines the place of Franchising in the developing economy with emphasis centered on the Nigerian fast food sector. The study was conducted in different parts of Nigeria with the use of research questionnaire and observation to gather relevant data that was statistically analyzed. Franchising was generally accepted in Nigeria and yielded good profits for the local operators. Thus, franchising in the Nigerian fast food sector is a booming business that is meeting the need of Nigerians in terms of job creation and revenue generation. In view of this, we recommended that the government should strengthen the Nifa and NOTAP toward effective and efficient regulations and that more foreign fast food should take advantage of the Nigeria marketing environment to boost competition. Keywords: Franchising, FDI, Local market, Fast food, Business, Environment 1. Introduction Global competition is intensifying because, domestic companies that dominated the local market at home now find foreign competitors to contend with based on their influx through franchise as a distribution strategy in other to gain entry into new markets. Franchising according to Om sai Ram in Haiying (2005) is a powerful vehicle for the marketing and distribution of goods and services employed by franchisors to market their products. Alon (2007) posits that international franchising has grown significantly since the 1960s because of push and pull factors. Domestic saturation, increased competition and diminishing profits at home have pushed franchisors to examine their opportunities abroad while, favorable macroeconomic, demographic and political conditions abroad pulled them into specific markets. Franchising has been observed by industrial watchers as the key strategy adopted by multinationals to promote and expand their trade in other untapped markets and this cut across different sectors including the fast food sector which is our area of study. It is therefore our intention to focus on the introduction of fast food franchising and its acceptability in Nigeria. Over the past 53 years when Macdonald opened her first fast food in Chicago till today, Emerson (1979) claimed fast food franchising in the developed economy has increased geometrically. America has net over 521, 215 outlets in fast food stores alone according to Om sai Ram in (Haiying, 2005). He observed further that, franchising is well established in most developed countries today with over one third of all retailing is franchised – related. In recent years however, opportunities have diminished in these countries as well, and international franchisors have begun to seek development opportunities in developing economies such as China, Brazil, South Africa and Nigeria. Chay et al (1990) in agreeing with Alon argued that over 75% of the expected growth in the world’s trade over the next decades will come from developing countries. It was not surprising therefore, that franchisors are assessing the economic potentials in this market. With China’s 1.3 billion people, 200 million of which are within the growing middle class and a Gross Domestic Product (GDP) that is above 40%, Ordish (2006:30) described China has the “mother of all franchise markets”.
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