Monday, December 31, 2007

Franchising and economic growth 

Reading Mark Perry's post reminds me of the excitement around Kyiv, Ukraine in 1996 when it was announced that the country would get its first McDonald's. Certainly for most Kyivans the excitement was the chance for a real Big Mac. But for some it was a chance to work for a western franchise that had standards for delivery of services and products. I ran into one of the future managers of the place by happenstance in Budapest (where he had been sent to a "Hamburger University".) He was learning not so much how to make a hamburger but the principles of delivering a fast food product using western techniques.

I ate a few years later in a Pizza Hut in Cairo. The service was noticeably different than that in local Cairene restaurants. (I know, "you were in Cairo and you went to Pizza Hut???" I was there five weeks, and you can only eat felafels for so long. Vegetarian in the Middle East is not for the finicky.) The food came to you hot and fresh, and you would not have noticed much difference in quality.

So how much is passed along to developing countries by franchises, I wonder? How much of what we know in America about entrepreneurship is contained in a course one takes to learn how to manage a Pizza Hut, a McDonald's, a Subway? I suspect it's more than a little bit; I bet there's a research paper or more in there for those willing to dig around.