Question

Pizza Hut is an American restaurant chain that offers different styles of pizzas and many other fast food options. There are more than 5,600 store locations in 94 countries around the world, which are owned and operated by the local population of those countries by giving access to patents, trademarks, etc. (a) Which form of international business is adopted by Pizza Hut? Explain. (b) Explain any two advantages and any two disadvantages of this form of international business.

Answer 1

(a) Which form of international business is adopted by Pizza Hut? Explain.

Pizza Hut operates through franchises. Basically Yum (which owns Pizza Hut) is the franchisor that allows the franchisee to invest in a restaurant, operate it and it must pay the franchisor certain fees.

(b) Explain any two advantages and any two disadvantages of this form of international business.

Advantages:

• higher rate of success for new businesses
• prior experience is not required since the franchisor provides training, counseling and a business model.

Disadvantages:

• Franchisees must follow the business model and cannot innovate
• the risk of poor service offered by some franchisees always exist