US-Based Fast Food Restaurants: Factors Influencing International Expansion of Franchise Systems

Abstract:     
Studies of international franchising are scant, but growing, and can be divided into two main streams of research: those focused on environmental predictors of internationalization and those focused on strategic, firm level characteristics. Belonging to the latter category, this study empirically examines a set of firm level attributes as predictors of the decision-making on whether or not firms seek international expansion. Using longitudinal data from Bonds’ Franchise Guide 2001-2008, we draw upon a sample of U.S. based fast food franchise systems for testing our hypotheses. Specifically, our database is comprised of 1058 observations for 158 chains and we estimate a semi-parametric logistical model for international franchising. The model contributes to the literature by being the first to examine the non-linearity of international franchising determinants using the popular agency theory. The results show that (1) bonding, (2) percent of franchised units, (3) the number of states the system operates in, and (4) provision of area development agreements and sub-franchising significantly contribute to international expansion of US-based fast-food franchisers.

Number of Pages in PDF File: 28

Keywords: global franchising, fast food, non-linear

working papers series