The Tricky Business of International Restaurant Franchising
Skift Take
International expansion often provides the best opportunity for growth when a brand has saturated the U.S. market, but expanding overseas isn't without its challenges.
The McDonald’s Golden Arches are a familiar sight in the more than 100 countries where its 36,000-plus fast food restaurants are located.
The chain has spread across the globe with a well-developed network of franchises, a legal agreement whereby a franchisor licenses its intellectual property, trademarks and systems to a franchisee for a fee. But things can get tricky when a company sets its sights overseas, as illustrated by an ongoing dispute between McDonald’s and one of its two franchisees in India, Connaught Plaza Restaurants Pvt. Ltd.
At the end of 2017, half of McDonald’s 169 restaurants in north and east India operated by Connaught closed. Nearly all of the restaurants have since reopened, but the entities have been caught up in a months-long legal battle in which the franchisor began the process of terminating the franchise agreement, according to Quartz India.
The complicated case illustrates the challenges of international franchising.
"It’s [international franchising] similar to issues in the U.S., but aggravated by the long distance, and perhaps the franchisor’s lack of knowledge of the territory,” said Robert
