Franchising as a Growth Model by Fast Food Establishments in Nairobi City County

Abstract

Franchising is an arrangement in which an organization (franchisor) permits another individual or business entity to use its business concept and trade name in return for monetary compensation. It is one of the business strategies adopted by multinational corporations (MNCs) to penetrate foreign markets. Franchising is one of the best strategies in venturing into a new market since it is considered a low risk and has low commitment required for the firms involved and therefore it is more popular in the service industry. This study focused on franchising as a growth model in the fast food establishments in Nairobi county. There has been a tremendous growth in the industry over the last 20 years in which well-known international fast food chains have established their operations in the city. The Kenyan economy has grown over the years with a growing middles income class and a swelling urban population with tight work schedules. This has caused a change in lifestyle characterized by many people eating out and ordering packed food during working hours. The purpose of this study was to find out whether franchising as growth model has contributed to increase in fast food joints in Nairobi County. To enable the researcher, achieve the stated objective, a survey of the various fast food franchises was carried out. The study focused on primary data collected through the questionnaire method. From the results, it was established that the competition levels were quite high and therefore there is clearly high growth in the industry. The dominant players are international franchises. Selection of a market entry mode is influenced by certain factors and the findings of the study established that the franchisors’ public image and international experience informed the choice of franchising system for the surveyed firms. The study also established that the fast food establishments were able to grow because of their brand name and by offering quality services to their customers. The international development of resources, nature of resources and the different ways of utilizing these resources has an impact on growth of an organization. The outcome of this study emphasizes on the importance of resources to a firm. The respondents agree that the performance of the firms has been improved through resources obtained from the franchising network. This led to a conclusion that franchising strategy has an impact on the overall competence and performance of the franchised business. The research recommends that the government puts in place laws and policies to govern the business operations of a franchise to level the playing field for all businesses. This study was confined to the international fast food franchises and further studies are require to understand the application of franchising and business growth in the larger food and beverage industry