Heterogeneous Institutional environments and Franchise networks Development in Maghreb

Franchising has become a dominant model of distribution in the Western world. Franchising is also developing in emerging markets, with the internationalization of Western franchise systems. This paper analyses the franchise expansion differences between Morocco, Algeria and Tunisia. Explanations are proposed, based on insights from institutional theory (DiMaggio and Powell, 1983), where franchising literature has focused on agency theory and efficiency considerations in order to explain franchising expansion. The institutional environment, such as country risk, acceptance of foreign investment, and legal constraints may explain the differences in franchising expansion between the three countries as well as the government’s willingness to modernize the distribution structures. Another consideration is the franchise specific environment pertaining to franchising law: the right of the franchise, the development of federations that act to legitimize the franchise partners with resource providers, banks, and candidates for the franchise. An analytical framework of the institutional environment specific to the franchise is proposed.