Viewpoints | Aug 05,2023
Dec 17 , 2022
By Halima Abate (MD)
Originating in the United States, franchising has become one of the world's most popular expansion methods and distribution strategies today. It is an agreement between two entities. A replication of a proven business formula, the relationship between the franchisor and the franchisee has mutual benefits.
There is no limit to the concepts that can be franchised. Most business-format franchisors have demonstrated to other service industries how to standardize and replicate successful business endeavours of not only the brand and products of the franchisors. They have replaced the entire business model, including operations, know-how, and value-adding activities, coupled with a licensing right and strict operational responsibilities.
The licensing model worldwide has offered consumers lower prices through the efficient distribution of goods and services and consistent quality through standardization. This has been particularly true with the expansion of retail services.
Similarly, it is questionable to see retail franchising without higher quality and lower prices for consumer value. It would have improved at the rate they have throughout the world market. The efficiencies from the technological and digital revolution will probably lower consumer costs. Increased retail franchising in the developing world will provide the data necessary for researchers and host-country governments to determine the impact of retail franchising on economic development. Such empirical research is badly needed.
Other consequences to developing countries of the entry of retail franchising were cultural homogeneity by exposure to Western tastes, loss of economic diversification, and possible displacement of existing local businesses. Government action to encourage retail franchising was cited as the relaxation of legislation to allow foreign ownership and conformity with international codes of copyright protections, trademark rights, and other forms of intellectual property.
On the downside of franchising in emerging markets are capital controls that may inhibit the repatriation of fees and royalties, drastically reducing the investment's economic benefits. Legal constraints, bureaucratic conditions, changes in the legal environment, and unstable political leadership could have a negative spillover effect on the brand.
Some negative aspects of the model include challenges to control as the franchisor has no say over the established, non-branded part of the business, affecting the relationship.
Though it may be a new concept, social franchising, also referred to as not-for-profit franchising goods and services for social purposes rather than commercial benefits, is gaining momentum worldwide. As it facilitates a mechanism to deliver services and products with social goals, it attracts practitioners to apply business formats that achieve social benefits.
In developing countries, the model could address rural social problems.
In the health sector, franchisees are often existing health practitioners recruited for a network. However, the format is often fractional, where only some of the goods or services provided by the outlets are part of the branded group, such as family planning services on the outlet.
Contemplating the model to healthcare might be financially viable while surviving variations in quality and conformity ascribed to the established business from the outset, and only stands to benefit from the branding and other services provided by the franchisor.
Social franchising could enhance existing efforts and accelerate the delivery of critical social services in underdeveloped areas, such as primary healthcare. Similarly, it could be extended to other areas of public service delivery to achieve standardization and higher-quality services, such as education. Such programmes could also be delivered as public-private partnerships (PPPs).
PUBLISHED ON
Dec 17,2022 [ VOL
23 , NO
1181]
Viewpoints | Aug 05,2023
Fortune News | Nov 29,2020
Life Matters | Feb 11,2023
Life Matters | Nov 04,2023
Viewpoints | Mar 06,2021
Exclusive Interviews | Jun 24,2023
Fortune News | Apr 02,2022
Advertorials | Feb 26,2024
Viewpoints | Feb 15,2020
Commentaries | Dec 31,2022
Photo Gallery | 96787 Views | May 06,2019
Photo Gallery | 88968 Views | Apr 26,2019
My Opinion | 67184 Views | Aug 14,2021
Commentaries | 65765 Views | Oct 02,2021
Feb 24 , 2024 . By MUNIR SHEMSU
Abel Yeshitila, a real estate developer with a 12-year track record, finds himself unable to sell homes in his latest venture. Despite slash...
Feb 10 , 2024 . By MUNIR SHEMSU
In his last week's address to Parliament, Prime Minister Abiy Ahmed (PhD) painted a picture of an economy...
Jan 7 , 2024
In the realm of international finance and diplomacy, few cities hold the distinction that Addis Abeba doe...
Sep 30 , 2023 . By AKSAH ITALO
On a chilly morning outside Ke'Geberew Market, Yeshi Chane, a 35-year-old mother cradling her seven-month-old baby, stands amidst the throng...
Apr 20 , 2024
In a departure from its traditionally opaque practices, the National Bank of Ethiopia...
Apr 13 , 2024
In the hushed corridors of the legislative house on Lorenzo Te'azaz Road (Arat Kilo)...
Apr 6 , 2024
In a rather unsettling turn of events, the state-owned Commercial Bank of Ethiopia (C...
Mar 30 , 2024
Ethiopian authorities find themselves at a crossroads in the shadow of a global econo...
Apr 20 , 2024
Ethiopia's economic reform negotiations with the International Monetary Fund (IMF) are in their fourth round, taking place in Washington, D...
Apr 20 , 2024 . By BERSABEH GEBRE
An undercurrent of controversy surrounds the appointment of founding members of Amhara Bank after regulat...
An ambitious cooperative housing initiative designed to provide thousands with affordable homes is mired...
Apr 20 , 2024 . By AKSAH ITALO
Ethiopia's juice manufacturers confront formidable economic challenges following the reclassification of...
Loading your updates...