Assessing Potential Political And Ethnic Conflicts

It is vital to both newly-minted international franchise systems and experienced international businesses to focus on the need to perform a strategic analysis before entering a country or a region. Often, franchisors with no experience in international franchising are tempted to react opportunistically. There is more than one way to expand internationally. One avenue to consider is corporate expansion into a region with the development of company-owned outlets and regional offices. Divisions within a society based on ethnicity, language, religion and even such subtle differences as those of apparel must be taken into account. Assuming that the franchisor has determined that a country or region presents a situation stable enough to franchise its operations there, the franchisor can consider defining a territory to improve its chances to survive political unrest. The company should not automatically include force majeure or "act of nature" provisions in the contract. It should be wary of exceptions to transfer restrictions.