Explain why international franchising is the most popular mode of market entry

for many global brands such as Starbucks, McDonalds, KFC, etc.?

There are reasons why international franchising is the most popular mode of
market entry for many global brands. The first reason is rapid expansion. Franchising
can be an effective way to achieve rapid growth. When a company franchise, they do
not have to go through the process of obtaining financing like they would with a
typical expansion. Instead, the franchisee supplies the capital and assumes the bulk of
the risk that comes with any new business venture. The second reason is passive
income. Franchises create passive income for most of the company, which is income
requires little effort on the company’s part. Typical franchise agreements require that
the franchisee pay royalties to the franchisor, which usually ranges from 5% to 15%
of gross sales.

List 2 possible problems with international franchising?

The two possible problems with international franchising are costs and lack of
flexibility. First, costs. Creating a new franchise location may be more costly than
starting a new business from scratch. UK Business Link says that franchises can be
costly to open and a franchisee may have to pay continuing management service fees
and send a certain percentage of profits to the franchisor. The franchisor may also
require that franchisee contribute to advertising funds and franchise owners may not
be able to control how advertising funds are used. Second, lack of flexibility. Creating
a new business from scratch gives the owner the ability to set company policy as he
sees fit. When someone start a new franchise, they are subject to the rules set by the
franchisor. For example, the owner of a McDonald's location cannot simply decide to
start offering a new product that is not approved by McDonald's. Franchise rules can
limit a franchisee's ability to tailor products and services to meet the demands of the
local market.