Franchising and small medium‐sized enterprises (SMEs) in industrializing economies

Purpose – The purpose of this paper is to examine the extent of interest in franchising among small medium sized enterprises (SMEs) in the Kingdom of Saudi Arabia and to identify attitudes towards the mode of operation's success held by practitioners. Design/methodology/approach – A literature review is presented to explain franchising and the reasons for its adoption by SMEs. Secondary information obtained from published sources forms the basis for a summary of conditions in Saudi Arabia. In addition, a survey questionnaire was administered to a sample of managers in the Eastern Province of Saudi Arabia to determine their views. Findings – Franchising is deemed to be a suitable business format for SMEs and franchising support systems contribute to its success, although some problems are acknowledged. There are good prospects for further growth, but also obstacles to overcome. Research limitations/implications – Resource constraints limited the scale and scope of the survey and there is a need for further studies of more executives in other locations. Practical implications – Policy makers in Saudi Arabia are now emphasizing the importance of both franchising and SMEs. This study affords insights into how practitioners see franchising and may help to inform decision and strategy making in the public and private sectors. Originality/value – Most franchising studies have been conducted within American and European environments and there have been few attempts to examine the issue within the context of Saudi Arabia. This study therefore advances knowledge and understanding about a neglected area of commercial activity in an industrialising economy such as that of Saudi Arabia.