Tchibo Goes Global: Implementing a Hybrid Franchising Strategy at Germany's Leading Coffee Retailer

Hailed as one of the most successful business models for expansion in the Western world, franchising enables the owner of a brand (the franchiser) to overcome scarce resources and the problems of delegated responsibility by making the franchisee a residual claimant on profits. Tchibo, Germany's leading coffee retailer, has created a hybrid commission-agent model of franchising, whereby the franchisee contributes a small investment but does not pay any start-up costs and receives a minimum salary plus a commission on sales. A look at the history and development of Tchibo's hybrid franchising model and its internationalization strategies suggests lessons for other organizations seeking to expand their operations into rural and global markets. A commission-agent model of franchising developed by a leading German coffee seller offers a new avenue for organizational leaders who seek to expand their operations into rural areas and abroad.