Financial Institutions
Another issue observed is the issue of financial institutions. According to the case, the banking sector is almost 90 percent foreign-owned. Despite this fact, the financial sector in the country is not very informed on matters of franchisors and franchisees in the country, which makes it hard for the financial sector to fund or enter into partnerships with this form of business ownership.
We have also observed that within the country there is insufficient information on franchising enterprises. This acts as a drawback to the successful growth of the business. As a result, even potential investors may shy away from entering into this kind of business since they are not aware of the costs and benefits associated with the business.
Franchising enterprises flourish where there is a big local or regional market. This reduces operational costs and makes logistics easier. In the case of the Croatian economy as the case study reflects, is rather small. The San Francisco coffee house being a hundred percent locally owned makes it hard for them to open as many outlets as they would wish.
In addition, we have observed that the owners have a limited capital base. This makes it hard for them to operate as many outlets as they would wish in the local market, let alone the regional or international markets.
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