Purpose – In this study, the authors identify how formal institutional environments in destination countries
matter to franchise chains as they internationalize. The institutional environment of the destination countries
of franchise chains is characterized according to three institutional dimensions necessary to attract
international investment – public governance, ease of doing business and legal processes – and analyzed in the
context of regional and global franchise expansion.
Design/methodology/approach – The descriptive quantitative study involved 625 franchise chains from
Australia, Brazil, Germany, India, Russia, South Africa and the United States, with a total of 2,939 observations.
Findings – Results suggest that franchise chains from emerging markets are guided by the institutional
conditions of ease of doing business and the quality of legal processes in global expansion and guided by ease
of doing business, quality of legal processes and governance in regional expansion. On the other hand,
franchise chains from developed markets are guided by the ease of doing business, quality of legal processes
and governance in global expansion and governance and ease of doing business in regional expansion.
Research limitations/implications – The sample included only franchise chains associated with
organizations that represent franchises in their countries of origin, and the study does not analyze the effect of
institutional distance between countries of origin and destination.
Originality/value – This study identifies the formal institutional characteristics that explain selection and
commitment in international markets by franchise chains from different countries. The contribution is in
analyzing the phenomenon through the lens of institutional theory and showing, through a global sample, that
institutions matter to franchise chains from different types of countries (developed and emerging) and with
different strategies for internationalization (global and regional).
Institutional environment, Franchise chains, International markets, Internationalization