Pakistan

Franchising in Pakistan has recently been growing especially in the hospitality sector. Several major U.S. hotel chains, three major U.S. restaurants, and a U.S. car rental company are currently represented in Pakistan through franchisees. Franchising provides multinational companies with an opportunity to enter the Pakistan market without a major capital commitment thus reducing the investor's risk. The local franchisee offers a foreign firm local expertise and can help in adjusting to the Pakistan business environment. However, potential problems can arise between the franchiser and franchisee. Possible areas of tension between franchiser and franchisee include quality control, intensity of marketing efforts by the local franchisee, and possible conflict of interest on part of the franchisee. Most importantly, there is no way of truly knowing what the local affiliate will do once the franchise contract is expired or terminated. The affiliate may even turn on the multinational firm and become a local competitor.

When considering the development of a franchise operation in Pakistan, it is wise to first evaluate quality control. The quality standards of Pakistan tend to be much lower in comparison to the United States and other developed nations. In the past, franchisers in Pakistan have found it necessary to terminate operations in response to major quality control issues. Importing raw materials, especially food ingredients, is a big problem for franchises in Pakistan. The regulations imposed on imports can change abruptly and rarely are they easily interpreted. In Pakistan, all imported food items, particularly meat items must be certified "Halal", (slaughtered in the proper ritual Islamic manner). When drafting a franchise agreement for operations in Pakistan, it is wise to ensure that the agreement include territorial coverage, duration, franchise rate, protection of trade secrets, quality control, and minimum performance