START-UP COSTS

From a business perspective, international franchising appears to offer lower risk than other means of entering overseas markets, because fewer up-front investments are necessary. With increasing political turmoil and the ever- accumulating balance of payment deficit of the Bush administration, franchising looks like an attractive option for any American business wanting to move abroad. Despite these propositions , US franchise systems have been slow and hesitant to expand internationally though they are well established in domestic markets. Many reasons may account for this but it is likely that while there were ample growth opportunities at home the imperative to go elsewhere was lacking. Additionally many companies lacked international experience, had limited financial resources, and assessed the risks of operating in foreign markets as being too high (Eroglu, 1992).

The assertive view is that franchising is a bold and imaginative concept and offers perhaps the fastest , most proven technique to introduce commercial methods of distributing goods and services, creating jobs, and encouraging entrepreneurship in countries starved for decades of most of these features of society that are taken for granted in the west. One cannot but be struck by how often franchising, with its familiar components and easily understood principles, serves as a sort of bridge between widely varying cultures, sometimes even where there are ancient rivalries. United by the shared goal of bringing developing countries into the mainstream of the world economy, franchising can be seen as a tool to use in reaching that goal. And this recognition is a powerful incentive to set aside language, cultural, and historic barriers (Zeidman, 1993).