The extremes of franchising in a post-communist country

Abstract

Purpose

Franchising has become an increasingly popular overseas expansion strategy for companies in various industries. A successful development in a transition economy such as Serbia has been exclusively associated with McDonald’s, which raises concerns about the ability of other international franchises to penetrate the Serbian market. The purpose of this paper is to explore the customer-based constraints that may hamper the spread of franchising in a post-communist country. Specifically, factors such as country-of-origin (COO) effects, longevity and brand localness/globalness that may affect consumers’ preferences are considered.

Design/methodology/approach

This paper uses mixed methods, that is to say a combination of qualitative and semi-quantitative approaches. Primary data were collected using (45) semi-structured interviews with local customers. The (success) story of McDonald’s in Serbia serves as the reference point.

Findings

The findings suggest that COO and localness are both relevant in explaining consumer preferences. Longevity signals the ability to adhere to international standards as well as regular local engagement. The results also stress that, contrary to widespread belief, global franchise names do not have an advantage over local players.

Research limitations/implications

Further investigation is needed to empirically examine the relationships between several key variables identified in the present study (longevity, COO, tradition, patriotism, trust, emotional attachment, perceived quality, authenticity, satisfaction, behavioral intentions). These may influence franchise system penetration and, ultimately, its performance.

Practical implications

Although post-communist countries have become highly appealing for international fast-food and coffee-shop chains, these countries are hard-to-please environments for setting-up and operating a franchise business. These findings advocate franchises to find the right balance between their global name and a quick integration of indigenous attributes to compensate for their late entry. Franchise marketing managers must develop a brand narrative that includes both local brand associations and global/international standards to increase franchise brand awareness and generate a positive consumer attitude.

Originality/value

Despite the call for more studies on franchising in emerging markets and their realities, not much attention has been paid to (local) customer-related constraints. The inclusion of a temporal perspective appeared to be highly relevant in investigating the potential effect of longevity on the local development of the franchise system. Moreover, there is a scarcity of scholarly branding research in the franchising sector. Local competition, although a neglected dimension in prior studies, has been examined through consumer preferences toward global and local brands. The chosen research methodology responds to the recent call of scholars for more diverse approaches. Finally, as a post-communist, transition and emerging economy, Serbia serves as a stimulating and yet uncovered research setting, given its tumultuous history with Western countries, as well as the long successful history of the McDonald’s franchise.

Citation

Tournois, L. and Forterre, D. (2020), "The extremes of franchising in a post-communist country", Journal of Business Strategy, Vol. 41 No. 3, pp. 3-10. https://doi.org/10.1108/JBS-01-2019-0022