Franchising: Under a franchising agreement, the franchiser grants rights to another
company to open a retail store using the franchiser’s name and operating system. In exchange,
the franchisee pays the franchiser a percentage of its sales as a royalty. Franchising
provides an opportunity for a firm to establish a presence in countries where the
population or per capita spending is not sufficient for a major expansion effort.24 Franchising
accounts for 40% of total U.S. retail sales. Close to half of U.S. franchisers, such
as Yum! Brands, franchise internationally.2