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Subway in China
Transcript of Subway in China
Patricia Eden Rodrigo and the challenges of Franchising in The Challenges of Franchising in China Main barriers SWOT Analysis of
Franchising in China As is known by the public, an increasing numbers of foreign franchse companies have been entering Chinese market due to its huge market, long-term growth potential and increasingly high disposable income, like the most renowned two franchise brands in China, KFC and McDonald, which already made a big success there. Today, we are talking about the challenges of franchising in China, also we will use a real case of Subway to explain these problems and solutions. In addition to KFC and McDonald, Subway is the third-largest U.S. fast-food chain in China. However, Subway also lost money due to a scheming partner when made the initial franchise here. Obviously, franchising in China confronts some challenges and problems. As far as we are concerned, there are six main barriers for franchising in China. Knowledge gap
Ambiguous legal environment
Escalating start-up costs
Difficulties finding a right partner
Unavailability of suitable real estate
Restrictions on the repatriation of profits Strengths:
Classical and uniform operation philosophy
Powerful systematic support
Supervisory and advisory group
Lack of researching and developing new products
Focus on Americanization rather than combine local characteristic Take Subway franchise as an example Opportunities:
High disposable income and high level of consumptionOpen more locations to second and third-class cities
Other established fast-food chainsCurrent economic recession Subway’s Objectives Subway’s goal is to be ranked the number one Quick Service Restaurant (QSR) all over China while maintaining the great-tasting freshness of the products that is their trademark. Alternatives for the Problems Accelerate the research and developing process of new products and combine American flavour with Chinese taste
Conduct market research and find a right partner Recommendations If a franchise has a suitable partner, all other problems are not problems any more. As a good partner, he knows how to simplify business procedures, knows the relevant provisions, knows the local characteristics and knows what local customers want. Therefore, cooperating with a good partner is important and viable
They need to change their menu and adjust it for Chinese taste
Case Questions: Subway brings to China various intellectual property in the form of trademarks, patents and an entire business system. What are the specific threats to Subway's intellectual property in China? What can Subway do to protect its intellectual property in China? What do you think about Subway's method and level of compensating its master franchisee and regular franchisees in China? Is the method satisfactory? Is there room for improvement? What are the advantages and disadvantages of franchising in China from Jim Bryant's perspective? What can Bryant do to overcome the disadvantages? From Subway's perspective, is franchising the best entry strategy in China? Subway faces various cultural challenges in China. What are these challenges, and what can Subway and its master franchisee do to overcome them? THANK YOU "Subway is a business for tomorrow, not for today" Made in China: Fake stores In China's "fake world," consumers can eat a six-inch sandwich at an outlet strikingly similar to Subway.
In the case of Subway, the imitation version even accepts real Subway coupons.
Which is the original and which is the imitator?