BGP7730 Business Research Project: Franchisee Impact on Local Business

This research proposal explores the impact of large-scale franchises like KFC and McDonald's on local businesses. It outlines the research aims, objectives, and questions, focusing on the positive and negative impacts of franchise-based businesses and strategies for local businesses to compete. A literature review provides context, examining the challenges small businesses face due to financial constraints, supply chain disadvantages, and limited research and development capabilities compared to multinational corporations. The proposal aims to investigate these factors and assess the overall effects of franchisees on local business ecosystems.

Running head: MANAGEMENT
Impact of Big Franchisee on Local Business
Name of the student
Name of the university
Author Note:

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Executive Summary
The following proposal has been based on the providence of an idea on what kind of impact are
faced by the local organizations as a result of the establishment of large scale franchises like
KFC , McDonalds and many more similar multinational food chains. The proposal starts with a
brief background information of the business and continues with the providence of the research
aims, objectives along with the questions that will form the main basis of the research. A short
yet compact literature review has been provided in order to give an idea of the secondary
research works that will be considered. The conclusion ends the proposal which is just a
summarization of the proposal contents.

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Table of Contents
Introduction......................................................................................................................................4
Background Information..............................................................................................................4
Research Aims and Objectives....................................................................................................5
Research Problems.......................................................................................................................5
Literature Review............................................................................................................................5
References........................................................................................................................................9

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Introduction
The following proposal has been prepared to start a detailed research on the impact of the
large franchisee on the small business houses. The proposal has highlighted the different
perspectives of the franchisee business which has seen a steady growth in the last few years. The
literary review and a brief discussion of the different secondary literatures based on the following
study have provided an overview of the same. The major elements of the business
Background Information
At present there are more than 30.2 million small businesses across the globe. Small
business houses accounts for a large proportion of employment in the world. However, since the
last few years, there has been a steady rise in the number of people franchising their business
each and every year. Franchising has both its share of advantages and disadvantages. The
modern day business entrepreneurs often act smart and instead of starting from the scratch, they
tend to buy a franchisee and instantly become an owner. There are a lots of different advantages
for franchising which forces the management of the business organizations to opt for this
franchisee business. However, a lot of negative factors like the absence of proper management of
the business organization tend to decrease the importance of franchising as well as the need for
franchising among the small business owners. The research will be based on the description of
the previous research and a thorough analysis will be carried out over the perspectives of the
impact of big franchisees on local business houses.

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Research Aims and Objectives
The aim of the research will be to address the different issues and impact of the large
business franchises like KFC and McDonald over all other small business houses. The objectives
of the business will be;
 To find out the impact of the large franchisee over the small business houses
 To find out the positives and negatives of franchise based business
 To find out the ways to compete with the large franchises in the near future
Research Problems
MDP BRP BRQ
What effect does
franchisee business have
on local businesses?
Franchisees have negative
impacts on the local business
What is the impact of the large
franchisees over the small
business houses?
What are the positives and
negatives of franchise based
business?
What are the ways to compete
with the large franchises in the
near future?
Literature Review
The number of small business houses in the globe easily outclasses the number of large
and medium scale business that operates here. The small business organizations employ billions
of people all over the globe. For example in USA only the small business houses accounts for
over 99.9% of the businesses and employs more than 60 million people. However, as said earlier,
there has been a slow movement or transformation to franchisee business types in the last couple

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of years clearly indicates that the small businesses are reluctant to transform into franchisees.
There are many reasons for the huge gap in between the franchisee businesses and that of the
small businesses in the modern days due to a large number of different reasons. First of all there
are businesses that do not franchisee themselves (Doppelt 2017). The owners of the business are
much more inclined towards unique and proprietary business organizations. However, this kind
of business is totally run by the owners as because they are good at networking, offers good
customer service and value for the products and service, has a friendly and interactive staff, has a
great location and many more as such. However, these business organizations being small in
nature fail to create a unique reputation or brand name of its own that can be easily replicated
and transported to multiple locations (Glove. and Kusterer, 2016). Financial constraints are also
considered to be a large reason behind the absence of franchise among the small business
organizations. The high operating costs and the lower turnovers do not support the
transformation of these companies into a franchisee based business.
The companies like KFC, McDonalds and other large franchisee generally operate across
both national as well as international borders. These kinds of the companies generally provide
the host countries with large scale employment opportunities by providing franchisee. Their
aggressive mode of expansion has however, a negative outcome. This kind of tasks generally
outclasses the small business organizations and the local companies as the economies of scale are
enjoyed by these companies (Businessinsider.in. 2015). According to, Doppelt (2017) the
multinational companies like KFC, McDonalds and many other companies are the enterprises
that have large scale assets, facilities and subsidiaries under them (Mcdonalds.com. 2019). These
companies are therefore global players with huge budgets that are unmatched by other local
business organizations (Loebbecke and Picot 2015). While companies go transnational for

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myriad reasons, they all have a fundamental interest in optimizing their own value chain shifting
production to the location that offers the most favorable conditions for the organization. There
are different kinds of ways by which the business of the large scale organizations have major
advantages over their local rivals. First of all these companies enjoy a great supply chain. The
developed supply chain of the large scale companies helps the organization to ensure success for
the business. According to, Bansal Kim and Wood (2018) the proper and effective supply chain
management has been helpful for the organization to ensure the success of the business in the
most proper and effective manner. Apart from the supply chain management of the company, the
different kinds of technological advances applied by the company are one of the most important
elements of the business. The use of different kinds of advance technology in the business cannot
be matched by the small business organizations. The lack of proper financial backing and the
absence of the proper technical expertise lead to a negative impact on the small business
organizations.
Another major negative impact of the establishment of large scale business franchisees
over the local business organizations is research and development. The presence of research and
development in the business helps the organization to ensure the success of the business in a
proper and effective manner (Doppelt 2017). The better the research and development process,
the better will be the chances of the company to attract people. The small and local business
organization does not provide too much attention to research and development and concentrates
more on selling their products and marketing them. On the other hand according to, Fink Yogev
and Even (2017) the lack of financial back up also restricts the local organizations from carrying
on research and development activities. Local firms are unable to walk into the footsteps of the
large organizations to research and develop business products, unless and until they are able to

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receive a healthy financial backing. Despite the many positives, for some local firms, the arrival
of an MNC can be a death sentence (Loebbecke and Picot 2015). Where once they might have
enjoyed a dominant position in the local market, suddenly they have to compete with a huge
multinational and all that comes with it huge cash reserves, advanced technology, economies of
scale, quality products and most importantly franchisee business which can expand at a fast pace
and meet the demands of the customers accordingly. The franchisee businesses have also many
other advantages. Acquisition of talent is one of the main advantages of the organization (Glove.
and Kusterer, 2016). The talented people mostly choose large scale business organization like
KFC or McDonalds over other small organizations (Kfc.com. 2019). This is because the large
scale organizations provide better pay packages and also provide global opportunities for the
development of the personal as well as the professional career of the employees working for the
business organization (Loebbecke and Picot 2015).
The research will further investigate into the following area and will assess the positives
as well as the negatives related to the establishment of franchisees. The perspectives of the
franchisee business will be studied by considering both the positive as well as the negative side
of the franchisee based businesses (Doppelt 2017). The research will thus be very much
important and unique according to the trends of the business.
Conclusion
The proposal has given a basic idea on the basis of the research and what will be the main
points to be discussed in the following research. The research will be based on the determination
of the main reasons on the type of impact faced by the small local businesses as a result of the
large scale franchisees like KFC, McDonalds and many more similar organizations. The reasons

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for the inability of the small organizations to open franchisees and the result of such an inability
will be highlighted in the research.

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References
Bansal, P., Kim, A. and Wood, M.O., 2018. Hidden in plain sight: The importance of scale in
organizations’ attention to issues. Academy of Management Review, 43(2), pp.217-241.
Businessinsider.in. 2015. Businessinsider.in. [online] Available at:
https://www.businessinsider.in/Heres-what-it-costs-to-open-one-of-the-top-restaurant-franchises-
in-the-world/articleshow/48244433.cms [Accessed 18 May 2019].
Doppelt, B., 2017. Leading change toward sustainability: A change-management guide for
business, government and civil society. Routledge.
Fink, L., Yogev, N. and Even, A., 2017. Business intelligence and organizational learning: An
empirical investigation of value creation processes. Information & Management, 54(1), pp.38-
56.
Glover, D. and Kusterer, K., 2016. Small farmers, big business: contract farming and rural
development. Springer.
Kfc.com. 2019. Kfc.com. [online] Available at: https://www.kfc.com/about/franchising
[Accessed 18 May 2019].
Loebbecke, C. and Picot, A., 2015. Reflections on societal and business model transformation
arising from digitization and big data analytics: A research agenda. The Journal of Strategic
Information Systems, 24(3), pp.149-157.

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Mcdonalds.com. 2019. Mcdonalds.com. [online] Available at:
https://www.mcdonalds.com/us/en-us/about-us/franchising/acquiring-franchising.html [Accessed
18 May 2019].