Sanctions, Nukes and Juche : Franchising in North Korea

Could North Korea (officially, the Democratic People’s Republic of Korea) actually become Northeast Asia’s next big free market economy? At first blush, economic optimism about the Hermit Kingdom seems incredibly misplaced. North Korea is one of the most repressive countries in the world; with an overwhelming adherence to the state ideology of juche (national self-reliance), the North Korean government continues to systematically deny citizens almost all basic liberties. As if that were not enough, North Korea threatens to attack nearby nations and the United States with nuclear missiles, in spite of international sanctions meant to compel North Korean denuclearization. On the other hand, North Korea has expanded its efforts to enhance its international profile, including talks of potentially reuniting with South Korea and unprecedented meetings with the heads of state of both the United States and China. A post-sanctions North Korea could present an opportunity for franchisors, franchisees, and foreign capital to enter the country, exponentially expand its market potential, and mutually benefit from the positive spillovers of economic liberalization (e.g., cross-cultural communication and technology transfers). There are, indeed, tremendous challenges (risks and potential rewards) to bringing foreign capital and investment, including franchising, to North Korea. Economic liberalization and enhanced foreign capital, investment, and franchising can be achieved through the multilateral efforts of major trading nations and significant, but certainly attainable, changes in North Korean norms and laws