ABSTRACT
This study was carried out to know the influence of franchising in hospitality industries in Uyo metropolis, Akwa Ibom State. Two hospitality establishment, Le Meridien Ibom Hotel and Golf Resort and Plethora Hotel were selected. The main objective of this research was to determine the influence of franchising in hospitality industries in the South South of which the researcher narrowed it down to Uyo metropolis. The technique used was survey design, of which 660 staff of the two hotels was the population for the study, sample size was determined using Taro Yamane’s Method and 249 respondents made up of senior and junior management staff who were selected randomly for this research. Questionnaire was structured analyzed using percentage and regression. Percentage analyses the socio economic characteristics of the respondent as well as research question while regression was used to analyse the hypothesis. The result showed that franchising has an significant influence on hospitality industries in Uyo metropolis. Conclusion were drawn and the researcher recommended amongst other things that government should intense advertisement about the benefit of franchising and also be included as marketing strategy in academic curriculum.
TABLE OF CONTENTS
Title i
Certification ii
Approval Page iii
Dedication iv
Acknowledgement v
Table of Contents vi
List of Tables vii
Abstract viii
CHAPTER ONE
1.0 Introduction 1
1.1 Background of the Study 1
1.2 Statement
of Problem 3
1.3 Objectives
of the Study 4
1.4 Research
Questions 5
1.5 Research Hypotheses 5
1.6 Scope
of Study 5
1.7 Significance of Study 5
CHAPTER TWO
2.0 Reviewed of Related Literature 6
2.1
Conceptual framework 6
2.1.1
Franchising 6
2.1.2 History Of Franchising 8
2.1.3 The Spread Of Franchising 11
2.1.4 Types Of Franchise 12
2.1.5 The Advantages Of Franchising 13
2.1.6 The Disadvantages Of Franchising 14
2.1.6.1 Costs Of Franchising 14
2.1.6.2 Funding The Franchise 15
2.1.6.3 Other
Disadvantages 15
2.1.6.4 Factors
Influencing Franchising In Nigeria 17
2.1.6.5 Government Regulation In Franchising 18
2.1.6.5 Controversies
over Franchising 20
2.1.6.6 Franchising Goes
International 21
2.1.7 The Future of Franchising 23
2.2 Theoretical
Literature 23
2.2.1. Franchising in Nigeria 25
2.3 Review of Related Empirical Studies 27
2.4 Summary 28
CHAPTER THREE
3.0 RESEARCH METHODOLOGY 30
3.1 Research Design 30
3.2 Area of Study 31
3.3 Sources of Data 31
3.3.1 Primary Source of Data 31
3.3.2 Secondary Source of Data 31
3.4 The population of study 31
3.5 Sample and sampling techniques 31
3.5.1 Sample size 32
3.6 Instrument for Data Collection 32
3.8 Techniques for Data Collection 33
3.9 Validity and Reliability of sampling instrument 33
3.10 Data analysis technique 34
CHAPTER
FOUR
4.0 PRESENTATION,
ANALYSIS AND INTERPRETATION OF DATA 36
4.1 Introduction 36
CHAPTER FIVE
5.1 Summary of Finding 46
5.2 Limitation of Study 46
5.3 Conclusion 46
5.4 Recommendation
47
References
48
Appendix
LIST
OF TABLES
Table
4.1: Frequency distribution of
staff according to gender, age, marital status
and education qualification. 37
Table 4.2: Do you think franchising is one of the strategies in
hospitality 38
Table 4.3 Research
question: 2 Does franchising have Influence in hospitality
industries 39
Table
4.4: Do
you think franchising do lead to high level of patronage? 39
Table
4.5: What the level of
acceptability of franchise in hospitality industries 40
Table
4.6: What are the factor
influencing acceptances of franchise in
hospitality industries? 41
Table
4.7: People in Uyo do not know much
about franchised industries 41
CHAPTER
ONE
1.0 INTRODUCTION
1.1 Background of
the Study
Franchise is a system in which the
franchisor grants a license, trademark, and service mark, as well as advice,
and assistance in organizing, merchandising, and managing the business as a
long-term business relationship (Andrew, 2007). This system is a major expansion
strategy for the hotel industry because of its advantages (Koh, 2009).
Actually, the annual retail sales of business-format franchising were about
$246 billion in 1992 (Huber, 1993). In the lodging industry, franchising has
contributed so significantly to the growth of major hotel chains since the
1960s that it has made lodging one of the ten most franchised industries in the
United States (Cruz, 1998; International Franchise Association, 2006).
The success of the
franchise system is reflected in its spectacular growth figures. In the US
where the franchising system began in the early 20th century, there are over
3,000 companies involved in franchising, accounting for over 10% of GDP and an
estimated 30% of retail sales.
In the hotel industry the
franchising system is also constantly growing. According to Mintel Marketing
Intelligence 2005, International Hotel Industry Report, 67% of US room capacity
is branded, mainly through franchise contracts. Almost all the big US hotel
chains are involved in franchising, eighteen of the top twenty US hotel brands
use franchising, so franchising has become a hot topic of interest in the hotel
industry. The situation is different in Europe where the franchising system is
less popular and the hotel chains still prefer to grow via leasing or
management contracts instead of franchising.
Asked about the different
behavior of the European and the US hotel markets concerning franchising, our
two European experts expressed similar opinions. Mr. Jordi Frigola, Senior Vice
President Jones Lang LaSalle Europe, explained that In Europe the level of
concentration and branding is very low compared to the US. Most of the European
hotel chains prefer the leasing contracts. And also the investors prefer a
lease contract with no risks on franchising contracts. Mr. Bernardo Cabot,
Director of Expansion European Division of Sol Melia, on a similar vein added
that there are three potential barriers to the development of franchising in
the European hotel industry:
(1) a
lack of potential franchisees with both the necessary skills and the financial
resources needed;
(2) a
great concern about the quality standards of the potential franchisees and how
to enforce the chains quality standards in the franchisee’s property:
(3) litigation and other legal issues involved
in the franchise contract.
In parallel with the rapid
expansion of franchising, there is a growing interest among academics and
practitioners in studying the franchise system.
In recent
decades franchising has emerged as popular expanding business tool, which
combines diversity of products, services and company strategies. This business
model became an effective opportunity
for small tourism enterprises, which cannot afford to finance their development
(Dant & Kaufmann, 2003).
A lot of
trade formulas and business strategies are defined with the term ‘franchising’,
but often this denotation is given to them incorrectly (Bermúdez, 2002).
Defining the franchising concept is a task related to many difficulties,
because depending on the perspective of study (law, trade, institutional,
etc.), more attention is paid to some aspects than to others. Franchising is a commercial relationship between two
agents – franchisor and franchisee, who are legally and financially
independent, but share a common goal (Insa-Ciriza, 2003). Franchising is based
on a contract, by which the franchisor gives to the franchisee the right to use
a developed business concept,
including brand name, products, marketing services, methods and manners of
managing the business, in a specific field for payment. Usually in the
franchising system there are several franchisees, which have similar
cooperation agreements with one and the same franchisor. This allows them to
work together on the market by a cooperative system. In this context Díez et al
(2005) define franchising as a cooperative
system between different organizations, bounded by a contract, by which
one of them, called the franchisor, gives for a payment to the other party, called the
franchisee, the right to use the brand name and/or the commercial formula,
materialized by certain distinctive signs. The franchisor guarantees at the
same time technical support and the necessary regular maintenance services
during the term of the contract. From this definition the following fundamental characteristics of franchising can be found:
- Franchising
is a cooperative system.
- Relations
between the two parties are established by a contract.
Participants
in this system are the main company (franchisor) and the companies which sign
the contract with the franchisor (franchisees).
- The
franchisor provides to its franchisees brand name, commercial formula or
- Knowing how technical or other support
during the term of the contract.
1.2 Statement
of Problem
The importance of Hospitality industries
in any given economy cannot be over emphasized. This accounts for numerous
organizations all over the world. The role of these organizations world over
are better appreciated in terms of employment and revenue generations. In some
countries of the world especially Europe and America, operators of the
organization do a lot of strategizing to remain in business, especially new
comers to the sector (Games, 2002). Franchising is used as a marketing strategy
for business growth and development particularly for small and medium sized
businesses.
In developed economies, majority of these
organizations operate under a franchise arrangement. Examples include, Ken
Turkey Fried Chicken, Sambros Restaurants, Mc Donald’s etc. These organizations
are seen as market leaders in the United States of America (USA). For instance,
in these countries, smaller organizations compete to use their business names,
logos and trade marks to grow their own business (Kotler, 2007).
However, it is a different case in
Nigeria, most hospitality organizations in Nigeria are owned and managed by
individuals who may have little or no formal training in the field. As a
result, they run their organizations in a manner that suites their whims and
caprices. To some of the operators, marketing strategy is alien and
unreasonably costly. The operators fail to realize that for any business
organization to survive in the market place, the management of the organization
must apply one form of strategy or the other. Hospitality organizations in
Nigeria should consider franchising as a potent marketing strategy because of
the benefits accruable from using it.
1.3 Objectives
of the Study
The main objective
of the study is to determine the influence of franchising in the hospitality
industries in Uyo metropolis. Specifically the study will
i.
determine the influence
of franchise in hospitality industries in Uyo metropolis.
ii.
examine the level of
acceptability of franchise in hospitality industries in Uyo metropolis
iii.
determine the factors influencing the acceptability
of franchising in the hospitality industry.
1.4
Research
Questions
i.
to what extend has franchise
influence hospitality industries
in Uyo metropolis?
ii.
what is the level of
acceptability of franchise in hospitality industries in Uyo metropolis?
iii.
what are the factors that influence acceptability of franchise in
hospitality industries?
1.5 Research Hypotheses
Ho1: Franchise has no significant influence on
hospitality industries in Uyo metropolis
1.6 Scope of Study
This study will cover the hospitality
industries in South South part of Nigeria. With particular reference to Uyo,
Akwa Ibom State. Uyo was selected because they have franchise hospitality industries
in operation in the area. The result of the finding of this work will represent
the sector under study.
1.7 Significance of the Study
This Research is on the influence of
franchising in hospitality industries, it provide required knowledge that will
help hospitality industries accept that franchising plays an important role in
furthering the development of modern business. This research is therefore will
be of immense benefit to management and owners of hospitality industries,
researcher, and analyst. As such, this research will contribute positive to the
body of knowledge on influence of Franchising in hospitality industries.
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