Study of the influence of socio-economic factors in the international expansion of Spanish franchisors to Latin American countries

The saturation of the domestic market is one of the factors which drive firms to expand their business to other markets. Franchising is one of the formats adopted by companies when establishing their internationalization strategy. Spain is a country where franchising is strongly consolidated. This degree of maturity means that many chains seek other countries in which to operate. This work’s specific aims are, on the one hand, to offer a general view of the current situation of Spanish franchisors in Latin American countries and, on the other hand, to analyze which the socio-economic or external factors are that determine the presence of Spanish franchisors in this market. Canonical-correlation analysis is used to do so. The results show that Spanish franchisors focus on the market’s potential and size, and the per capita income, while they do not take into account its unemployment level, the country risk or the competitiveness there. This work shows that there is a series of socio-economic factors which influence the final choice of the destination country. However, this decision is not solely based on this country’s socio-economic aspects, but also on the structure of the franchising firm itself and on its export experience in other markets. This study therefore complements other research and helps franchisors in their difficult decision of choosing the destination for their internationalization.