Franchising as a Market Entry Strategy by Kentucky Fried Chicken Into Kenya

Abstract

Franchising is a business strategy for building a presence in foreign markets. It is common in the service and retailing enterprises. Franchising is therefore a distribution network of independent business relationship that not only allows sharing of brand identification but also provides a strong marketing and distribution system. Franchising is based on mutual agreement between two parties that is the franchisor and the franchisee. Thus, there is no standard franchising contract. This study focused on the KFC and within the context of appropriateness which has not been done before. This study was therefore designed to fill this gap. The study was based on one objective: to determine how franchising strategy is used a market entry strategy by KFC into the Kenyan Market. 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 valid conclusions. The findings of this study according to the objective were that KFC adopts the same franchising processes for all its branches. KFC underwent different processes to attain its various franchises. The objective of this study as stated above was to determine the factors that influence the application of franchising as a strategy by KFC. Franchising as a strategy enables a company to gain competitive advantage over its competitors. The competitiveness is achieved by nature of product, nature of the market, capacity of the franchisor, capacity of the franchisee and the rules and regulation of the host country. A greater proportion of the respondents reported that they would actually use franchising if they were to start their own businesses, a sign that they are actually in support of franchising as a mode of entry into foreign markets. Most of the managers cited heavy taxation and cumbersome formalization procedures as the main challenges facing franchising in Kenya. The study established that the management needs to have a positive rethink towards the use of franchising and have the right resources as the success of a business or strategy depends primarily on the value judgment, energy and skill of its top managers and the strategic implementation within the context and parameter of the uncertainty and ambiguity of the environment subjected to volatility. The study further established that strategic training is recommended to top management and all employees in the fast food franchises in order to enhance their performance. Also it recommended that top management should undertake a comprehensive study and adoption of strategic management in all and every aspect and areas of its concern so as to synergies, restructure, re-engineer and reposition its operations and thus enhancing competitiveness and performance.