Reasons Why Foreign Firms Are Forsaking Franchises

October 11, 2011 by Cris | 0 Comments

The Moscow Times:

Every morning Christopher Wynne, an American living in Moscow for the last 10 years, is off to a battlefield, armed not with an assault rifle but a rolling pin and pizza cutter.

Wynne, who is chief executive of Papa John’s Russia, a local franchisee of the U.S. pizza delivery chain, said his company faces many problems, including bureaucracy and high interest rates.

“Doing business in Russia is somewhere between sport and war every day. You have to face a lot of challenges,” he said.

These problems, however, are typical for most franchises operating in Russia and result in some foreign companies giving up franchising in order to run their operations directly.

“Foreigners are cautious about the political and economic situation in Russia. The franchising scheme requires stability and predictability of the economy,” said Alexei Mogila, head of the trade real estate department at Penny Lane Realty. Read more.

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