largest in the world, with 156 million people. It was also the 12th largest country in the world's GDP. However, it ranked 13th per capita income. Brazil is an urbanized country, and So Paulo is the second largest city in the world after Cairo.16 The first Pizza Hut in Brazil was established in 1988, when Brazil was economically very instable. It was a period of high inflation. At that time Pizza Hut did not know how to implement a business in Brazil. It entered the market through a franchisee. It was only in 1991 that an office was set up to establish a plan for the country. Pizza Hut was expanding its business through corporate franchise. "In a corporate franchise, the corporate franchisee is given a whole territory, generally the same as a state boundary with the exception of So Paulo, and is not allowed to franchise (sell a franchise to someone else)."17 This was the best option for Pizza Hut at that time, because they needed franchisees with "strong financial backing and experience in operating in an inflationary environment".18 This situation had its pros and cons. The problem is that the franchisee ended up having too much power, which "could affect Pizza Hut's implementation of a Brazilian strategy".19The only control Pizza Hut had was that they established goals for the franchisee to give them a guideline of "how to grow the business in order to maintain the franchise."20 For being a big city, So Paulo was divided into 5 different franchises. United Food Company (UFC) is one of Pizza Hut's original franchises. UFC also became a supplier of cheese, lowering the costs for all the franchises of the group. In 1997 Pizza Hut had other suppliers and imported cheese from abroad.21 In 1993, Pizza Hut felt like they were losing control of their Brazilian ventures. They had "no equity interest in any of its stores."22 So they decided to buy back the 35 stores that they had sold to UFC. After analysing what they bought, they realised...
