Franchise Business Development Model: Theoretical considerations/Fransizes Verslo Vystymo Modelis: Teoriniai Samprotavimai

1. Introduction Franchise is one of the company's (business) development forms, which is based on contractual relations between companies, especially proliferated in services sector (Blair, Lafontaine 2005). This business development form became used more than a hundred years ago (Mendelsohn 2004a). Popularity of franchising has extremely increased over the past few decades due to the intensive globalization processes. Due to the intensive globalization processes the cultures are mixing, consumption habits change, people tend to travel more and they seek for the same well-known brands of the same goods, services and quality (Alon 2006; Blair, Lafontaine 2005). USA is still the biggest market of companies pursuing franchise business system. According to the data of 2009, 7.88 million employees have been working in franchising sector in USA, generating 1280 billion Euros per year. The other large markets of franchising are: China with 3.5 million employees, Japan with 2.4 million employees and 243 billion Euros turnover, Australia with 0.7 million employees and sales of 130 billion Euros, as well as South Korea with 1.2 million employees and sales of 95 billion Euros in 2009. The other rapidly developing markets of franchising business are Brazil and South Africa with 0.72 and 0.46 million employees respectively and approximately 35 billion Euros sales (PriceWaterhouseCoopers 2009). USA is considered as a pioneer of franchise business system. Nevertheless, due to development of global market, USA market tendencies have a great influence on businesses in Europe. Therefore, franchise business system was transferred to the European market and now it is successfully expanding. The countries with largest franchising business markets are France, Germany and UK with 0.69, 0.45 and 0.45 million of employees respectively, whereas the highest sales are generated in Germany, which in 2009 were 48 billion Euros. Also franchising is rapidly developing in Turkey and Poland, which already employed 0.25 and 0.35 million of employees respectively in franchising business in 2009 (PriceWaterhouseCoopers 2009). It total approximately 28 thousands of franchising brands exist all over the world, where Europe counts for 35%, Asia for 45% and North America (USA and Canada) for 12%. However, it should be pointed out that major part of the franchising brands all around the world are of USA origin, and only in recent years the local Asian and European brands are also emerging rapidly. Rosenberg International Center of Franchising carried out a research in 2006 with the aim of determining the situation of franchise business system prevalence in EU among international companies of USA origin. One hundred and nine companies of USA origin participated in the research, all of them were members of International Franchising Federation with 115 thousand business units worldwide. The research demonstrated that 18% of the respondents were from the fast food sector, 14% were from retail and services sector and 12% were from household and commercial services sector. However, only 8.4% of all the respondents had their business units in Europe, although even 52% of them had business units outside the USA (Rosenberg International Center of Franchising 2006). This study has shown that franchise business system is not very widespread in Europe. Nevertheless, these results might be influenced by plethora of reasons, which are not adequately analyzed in the scientific literature. In Lithuania franchising is not a popular business development form as only 0.02% of all companies in Lithuania operate in franchising mode (according to the data of Lithuanian statistics department in 2009). Therefore, it can be stated that franchising is very poorly extended in Lithuania. Also, very few scientific researches have recently been carried out in Lithuania in the field of franchising. Some theoretical insights about franchising promotion in Lithuania were presented by Smitas and Jucevicius (Smitas, Jucevicius 1999). …