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Franchising
Franchising is a specialized form of licensing whereby the franchisor sells 
to an independent party (the franchisee) the right to use a trademark that 
is fundamental to the franchisee’s business in return for a percentage of the 
franchisee’s profits. It differs from licensing in that it gives an organization/
company more control over the actual marketing of the product.
Franchising is commonly found in the fast food sector (for example, 
Domino’s Pizza, Pizza Hut, Kentucky Fried Chicken, Burger King and 
McDonald’s worldwide) as well as in the clothing industry (for example, 
Benetton, which relies on franchised stores to market its products). It is 
also found in the car hire industry (for example, Hertz Rentals), in hotel 
chains (for example, Holiday Inn) and in car dealerships, entertainment and 
business services. Franchising usually involves a longer commitment than 
licensing, and franchising contracts specify the terms and the conditions 
that the franchisee must follow in return for permission to use the fran-
chisor’s brand name and logo. The franchisor may provide assistance with 
training staff and sales promotion and may stipulate certain requirements 
to be followed, such as standards of customer care, quality and health and 
safety standards.
The franchisee has the major advantage of knowing the local culture’s 
preferences and can, with permission, modify its products accordingly. This 
is the case, for example, in India, where McDonald’s offer ‘veggie burgers’ 
and drink companies produce varieties of drinks acceptable to the local 
palate and religious sensitivities.
Summary
Technology transfer across cultures is not always an easy process and 
often does not lend itself to quick solutions. It requires skills to oversee 
complex, and at times ambiguous and often stressful, management of 
change scenarios. The identification of the potential obstacles at an early 
stage in the process is essential.
The effective transfer of skills and knowledge across cultures is a very 
demanding task requiring energy, commitment and considerable training 
skills. It also involves an understanding of cultural sensitivities and often 
much patience and a willingness to overcome a variety of interpersonal, 
social, economic and political obstacles. Much relies on the ability to 
establish a climate of trust and mutual respect between the two cultures 
involved and, where possible, to maximize cultural synergy.
These skills are particularly relevant for those involved in joint ventures, 
working as project directors, aid advisers, members of NGOs working 
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Transfer of Skills, Technology and Knowledge 257
with the international community and diplomatic staff involved in 
developing trade links and the promotion of their nation’s business inter-
ests in potential export markets. There are advantages and disadvantages 
involved in taking part in IJVs; one of the most desirable benefits is the 
gaining of local knowledge.
At the outset, there is a need for comprehensive briefing of both par-
ties, including management and workers, on the culture and business 
style, and the differences need to be fully identified and explained. The 
establishment of agreed procedures which are accepted by all concerned 
is essential to the success of the endeavour. These include setting realis-
tic goals with targets for achieving each stage in the transfer, as well as 
incorporating wherever possible cultural synergy and the development 
of effective multicultural joint teams to oversee the transfer at all stages 
of the process.
Training of the workforce in the necessary culture should include the pro-
duction of job descriptions and job specifications required to implement 
the new technology as part of a management of change programme. To 
ensure a smooth transfer, there should be ongoing consultation between 
both parties at all stages. In addition, local government policies should be 
clear on any licensing restrictions, restrictions on equity ownership and 
ownership by foreigners of local assets, as well as sound protection for 
intellectual property rights and legal protection in the local market.
Licensing and franchising are other methods whereby technology, skills 
and knowledge can be transferred. These offer less risk in capital outlay 
for both the licensee and franchisee, but both will need to meet certain 
standards of performance and quality as stipulated by the owners of the 
intangible property rights.