Sustainable Development Through Franchise Innovation in the Digital Economy

Sustainable Development Through Franchise Innovation in the Digital Economy

Ye-Sho Chen (Louisiana State University, USA)
DOI: 10.4018/978-1-7998-1005-6.ch004

Abstract

Franchising has been popular as a strategy for businesses to grow and innovate. It is even more so in today's business need of developing digital solutions for sustainability. In responding to United Nations' Sustainable Development Goals, using franchise innovation to replicate proven sustainable solutions in other parts of the world is an effective approach to scaling up solutions to achieve Sustainable Development Goals. The essence of a successful franchise innovation lies in managing the good relationship between the franchisor and the franchisee. In this paper, we show that digital business solutions for sustainability play an important role in growing and nurturing such a good relationship. Specifically, we discuss that franchise innovation via Netchising, combining the digital power of the Internet for global demand-and-supply processes and the international franchising arrangement with local business solutions for sustainability, is an entrepreneurial approach to communities' development where economic and social aspects are mutually supportive.
Chapter Preview
Top

Introduction

International franchising as a global growth strategy is gaining its popularity (Justis, & Judd, 2002; Thomas & Seid, 2000; Chen, & Justis, 2006). For example, the U.S. Commercial Service estimated that India has an estimated market size of $50.4 billion in the franchise industry and international franchising is a growing industry for U.S. franchises to expand in India (U.S. Commercial Service, 2018). In addition, Brazil has 1,643 franchising chains and 79,988 franchising units, ranking the Brazilian franchising market as the 6th largest in the world (in number of units) and the 4th largest (in number of franchise chains) (U.S. Commercial Service, 2018). The popularity of franchising continues to increase, as we witness an emergence of a new digital business model, Netchising, which is the combination the digital power of the Internet for global demand-and-supply processes and the international franchising arrangement with local responsiveness (Chen, Justis, & Yang, 2004; Chen, Chen & Wu, 2006). For example, Entrepreneur magazine – well known for its Franchise 500 listing – in 2001 included Tech Businesses into its Franchise Zone that contains Internet Businesses, Tech Training, and Miscellaneous Tech Businesses. At the time of this writing, 33 companies are on its list (TBF, 2019).

In the 21st century, there is a need to develop digital business solutions for sustainability achieving the 17 sustainable development goals (SDGs) set by the United Nations in 2015 (UNSDG, 2015). For example, the Better Business, Better World (BBBW, 2019) shows that it makes good business sense for companies to pursue the SDGs to address the interconnections of global risks as indicated in the Global Risks Interconnections Map 2019 (World Economic Forum, 2019). New evaluation tools, such as The Chemical Sector SDG Roadmap (WBCSD, 2018) and Trucost – part of S&P Dow Jones Indices, a division of S&P Global (SB, 2018), help companies develop SDGs-aligned business strategies. Furthermore, Impact 2030 (IMPACT2030, 2019), a private sector led coalition, help companies align employee volunteer programs to meet the SDGs. Social franchising, i.e., using franchise innovation to replicate proven sustainable solutions where economic and social aspects become mutually supportive to enhance their impact on communities' development, is an effective entrepreneurial approach to scaling up solutions to achieve SDGs (Eggers, & Macmillan, 2013; Asemota, & Chahine, 2017; Samsudin, & Wahab, 2018).

Key Terms in this Chapter

Franchisor: The individual or business who grants the business rights.

Franchisor-Franchisee Learning Process: The stages of learning, including Beginner, Novice, Advanced, Master, and Professional.

Soft Landings: A process to help a company from one country land softly – without crashing – into the market of another country through a designated incubator.

Franchisee: The individual or business who receives the business rights and pay the royalties for using the rights.

Franchisee Life Cycle: The stages a franchisee goes through in the franchise system: Courting, “We”, “Me”, Rebel, Renewal.

E-Business Innovation: Innovation originating from innovative e-business applications that impact established business models and collaborations with stakeholders. (Lin and Hsia, 2011 AU27: The in-text citation "Lin and Hsia, 2011" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. ).

Franchisor-Franchisee Relationship Management: The vital factor for the success of a franchise, including: Knowledge, Attitude, Motivation, Individual Behavior, and Group Behavior.

Customer Service Life Cycle: Serving customers based on a process of four stages: Requirements, Acquisition, Ownership, and Retirement. Many companies are using the approach to harness the Internet to serve the customers.

E-Business: Coined by IBM’s marketing and Internet teams in 1996 it is defined as the application of information and communication technologies in support of all the business activities and processes in the entire value and supply chain.

Franchising: A business opportunity based on granting the business rights and collecting royalties in return.

Complete Chapter List

Search this Book:
Reset