The outbreak of COVID‐19, the disease caused by the SARS‐CoV‐2 virus, has had significant economic, political, and social consequences worldwide. The franchising sector, consisting mostly of retail and service businesses, is an example of an industry that has been deeply affected. The experiences of franchising stakeholders in Brazil highlight the strengths of the franchising model in such situations. This investigation, based on primary data from webinars with food service, education, retail, and business‐to‐business service companies in Brazil, coupled with reports from commercial and franchising entities, reveals how the COVID‐19 outbreak has affected the franchising sector. It illustrates the measures that were taken, the negotiations that take place between suppliers and landlords, the adaptation of business models, the effects on franchisor‐franchisee relationships, and the impact the pandemic has had on relationships with customers. The strategies adopted by Brazilian franchisors and franchisees suggest lessons for other franchising companies in similar situations, such as those in developing and emerging economies.
Purpose
This study aims to propose a comprehensive greenfield foreign direct investment (FDI) attractiveness index using exploratory factor analysis and automated machine learning (AML). We offer offer a robust empirical measurement of location-choice factors identified in the FDI literature through a novel method and provide a tool for assessing the countries' investment potential.
Design/methodology/approach
Based on five conceptual key sub-domains of FDI, We collected quantitative indicators in several databases with annual data ranging from 2006 to 2019. This study first run a factor analysis to identify the most important features. It then uses AML to assess the relative importance of each resultant factor and generate a calibrated index. AML computational algorithms minimize predictive errors, explore patterns in the data and make predictions in an empirically robust way.
Findings
Openness conditions and economic growth are the most relevant factors to attract FDI identified in the study. Luxembourg, Hong Kong, Singapore, Malta and Ireland are the top five countries with the highest overall greenfield attractiveness index. This study also presents specific indices for the three sectors: energy, financial services, information and communication technology (ICT) and electronics.
Originality/value
Existent indexes present deficiencies in conceptualization and measurement, lacking theoretical foundation, arbitrary selection of factors and use of limited linear models. This study’s index is developed in a robust three-stage process. The use of AML configures an advantage compared to traditional linear and additive models, as it selects the best model considering the predictive capacity of many models simultaneously.
Purpose
The purpose of this paper is to provide an overview of the franchising sector in Brazil and highlight the opportunities and offer strategies for practitioners. It also points out some challenges and gives suggestions to overcome them and thrive in the Brazilian market through the franchising system.
Design/methodology/approach
This paper reviews both literature and practical sources providing primary data from interviews conducted with franchising experts from the Brazilian Franchising Association and a consultant company.
Findings
International franchisors willing to enter the Brazilian market might face some challenges, such as the language barrier, the complex tax system and the need for local adaptations. Foreign entrants should consider low control entry modes as master franchising and area development agreements, with local partners that know the Brazilian culture, business system and regulations.
Originality/value
Brazil presents a great market potential for international franchisors. It counts with an established franchising system and a stable regulatory environment. This paper provides relevant information about the characteristics, opportunities and challenges to operate in the Brazilian market, offering suggestions of strategies and several possibilities to explore different regions, locations and models across the country.
Scientifc Editor Ilan AvrichirThis paper investigates the factors that explain the low internationalization rate of Brazilian franchise chains. We seek to identify whether the company's resources, such as monitoring experience, geographic dispersion in the domestic market and reputation, and institutional aspects, such as business groups affiliation, influence the probability of Brazilian franchise networks expand overseas. Using data provided by the Brazilian Franchising Association (ABF), the relation between these four aspects and the chances of internationalization are investigated through a logistic regression for a base of 420 Brazilian franchise chains, 49 internationalized and 371 not internationalized . The results confirmed the hypotheses related to the national geographic dispersion, franchisors with greater geographic dispersion in the domestic market are more likely to internationalize, and business group affiliation, franchisors affiliated to groups are more likely to internationalize. This study innovates by quantitatively proving that national geographic dispersion and business group affiliation are factors that determine internationalization of emerging market franchise chains, such as Brazil.
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