Retail franchise ecosystem dynamics: Insights from countries of varied development levels

Abstract

This study explores the influence of entrepreneurial ecosystems on international franchise expansion. We understand franchising as a part of retailing and reflect on various country-level factors that impact the international franchise growth in 52 developed and emerging markets. We classify developed and emerging markets based on the Human Development Index (HDI). Employing an entrepreneurial ecosystem framework initially applied to new business growth in cities, we investigate how cultural, institutional, economic, and infrastructure factors affect franchise growth. Our findings indicate that well-developed infrastructure, economic freedom, and supportive laws contribute to franchise expansion, while locations with high crime rates are less attractive to franchise expansion. Surprisingly, increased internet access or higher spending on research and development does not consistently further franchise expansion. Countries with higher levels of human development tend to have franchises that are expand more rapidly. However, we found little difference between countries with very high development and those with high development standards. This study helps us understand what makes franchise business expansion work and how they can succeed in different countries. Implications for businesses and governments looking to support franchise growth are explained. Finally, the results reflect the importance of understanding the unique dynamics of emerging markets and offers actionable insights for businesses and policymakers aiming to foster retail ecosystems and franchise on these specific markets entrepreneurship globally.