Wendy's Franchising In Argentina
Wendy's invested $13.2 million in the acquisition of eleven restaurants. Up to 1997, the expansion program had not been fully justified. The Board asked Paul Vandelen, the International Franchise Manager for Wendy's in Latin America, to prepare a report detailing the expansion program for Argentina.
This program should contain estimates on the optimal number of units, proposed sites to locate the new units, estimates of capital expenditures, as well as sources of funding.
To design his proposal, Mr. Vandelen had to deep in mind three important considerations: flexibility, control over the business operation in Argentina, and profitability.
This case deals with the issue of how to formulate a coherent global strategy program for Wendy's in Argentina.
Among the issues that can be explored by the instructor are the risk profiles country-by-country associated with investing in Latin America, the complexities resulting from establishing subsidiaries overseas, and the problems related to estimating returns on franchising in Argentina.
This case can be used to illustrate foreign investment risk. This is not, however, the most optimal use of the material. It is most useful if it is utilized in a section of a course on global management, a section of a course on global franchising, and in a training program on either global financing or international trade of services.