An Exploratory study of franchising as a small and medium enterprises development strategy in Kenya

Abstract

The study provides an exploratory insight into the factors that globally influence the development of franchising but more specifically, the study explores the determinants of successful franchising development among Small and Medium Enterprises both at the global level and in Kenya. The determinants were organized along four (4) key themes: External environmental specific determinants such as political, legal and economic factors and internal environmental specific factors such as motivation, strategic choice and firm level capabilities. Due to the nascent nature of franchising in Kenya among local enterprises, the study adopted a purposive sampling which entailed selecting indigenous SME business owners that had adopted franchising as business expansion strategy as well as key informants that were conversant with franchising. Primary data was collected by means of questionnaires which were both open and close ended with secondary data being gathered by way of reviewing documents and other report on the businesses that were being studied. The data collected was analysed using case study descriptions as an analytic strategy with the 2 cases being cross-synthesized with the aim of trying to match any existing patters between the 2 businesses. The findings of the study suggest that the Kenyan political environment which is closely related to the legal environment does determine the development of franchising and so does the state of the economy in the country. The motivation of the entrepreneur to choose franchising to grow their business as well as the expansion strategy that they use to achieve the same both have a bearing on the success of their enterprise. The study also shows that there are certain capabilities that need to be developed within the firm in order to succeed in franchising. The study recommends that the government improves the legal environment as regards intellectual property protection and commercial disputes resolution mechanisms in order to encourage franchising. At the firm level, business owners are advised to test their business models until they are confident enough of successfully replicating the same through franchising in order to increase the chances of survival.