Researchers have pointed out that the impact of the fast-food restaurant on the society is much greater and therefore the evolving competitive environment is determined by the degree of operational freedom that these franchisees have in adding side dishes to the main menu and so on (Watson, Kirby, & Egan, 2002). This trend has been particularly marked during the last decade from 1999 to 2009. Wendy’s has acquired a reputation for openly encouraging its franchisees to be innovative.
Modern fast food restaurants that consider making entry into a franchising business would have to adopt a strategy that would enable it to achieve intended results. There are a number of such options available to fast food restaurants such as those direct entry methods, e.g. export buying agency or a trading company and indirect entry methods, e.g. intermediate entry modes such as licensing and franchising. It’s also desirable to go for a hierarchical arrangement like a merger, an acquisition or a wholly owned subsidiary.
Franchising can be defined as “A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisors trade name and usually with the franchisors guidance, in exchange for a fee”. It is a business model for anyone who wants to start up a business that they don’t have an established business idea. Thus franchising has been in existence in over 70 countries worldwide with the sales of US$ 1 trillion (Sadi, 1997). In fact franchisee could be able to run a business under the particular brand name with the cooperation of a franchisor.
When it comes to Wendy’s/Arby’s fast food franchise in the USA it can be considered as one of the constantly growing combined