Franchising as an Operational Strategy by Java Restaurants Within Nairobi City County

Abstract

Franchising is a business strategy for penetrating in international markets. It is mostly observed in the service and retailing enterprises. Franchising is said to be a distribution of independent business relationship which don’t only allows sharing of brand identification but also gives a strong marketing and distribution network. Franchising involves a contract agreement between two participants that is the franchisor and the franchisee. Thus, there is no standard franchising contract. This project focused on Java Restaurants and how they use franchising as an operational strategy which had not been done before. This study therefore was done to fill this gap. The study focused on one major objective: to determine the essence of franchising as an operational strategy by Java restaurants within the Nairobi city county. This was a case study. Primary data was collected through the use of an interview guide. Content analysis was used in cross examining the responses in order to arrive at relevant conclusions. The findings of this study were, Java House adopts the franchise strategy in all its outlets. Franchising as a strategy enables the company to gain competitive advantage in the market by using other strategies like product development, cost leadership, differentiation, market development etc. Market competitiveness is achieved by nature of the product, nature of the market, capacity of the franchisor, capacity of the franchisee and the rules and regulations of the host country. Several respondents reported that they would actually use franchising if they were to start their own businesses, which shows evidence that they are actually in support of franchising as an operational strategy by businesses. However, they cited that there is heavy taxation and procedures in forming the business which poses as the main challenges facing Kenyan franchises. The study also established that strategic training is recommended to top management and all employees in the fast food franchises in order to enhance their performance especially in terms of uniform production.