Lorelle Frazer

Investment incentives for single and multiple unit franchisees

Purpose – This paper aims to provide a better understanding of the motivational incentives driving franchising choice from the franchisees perspective and, in particular, to investigate a comparison of single and multiple unit franchisee incentives.Design/methodology/approach – A qualitative methodology was adopted to gain a clearer picture of the salient issues influencing an individuals evaluation of franchising options. Both single and multiple unit franchisees within the McDonalds restaurant chain were interviewed.Findings – Major contrasts were identified between single and multiple unit franchisees with regard to their motivations for entering franchising. In addition, franchisees who were previously employed were found to be different from those who were self‐employed.Research limitations/implications – Because it is difficult to identify potential multiple unit franchisees prior to joining a franchise, it was necessary to interview existing franchisees for this research. It is possible that the...

Predicting Multiple Unit Franchising: A Franchisor and Franchisee Perspective

Abstract This paper examines the current status of multiple unit franchising in Australia. A review of previous research in the United States highlights some characteristics that may be unique to the Australian setting such as the age and size of franchise systems, the “hands on” involvement and experience of existing franchisees, monitoring cost effects, the use of franchisor performance evaluation and reward techniques, and the governance structure of franchise systems. Consideration has been given to both academic and trade literature in developing a set of propositions that predict the likely adoption of multiple unit franchising strategies within the Australian context. These propositions explain multiple unit franchising in terms of the franchisor (growth, firm characteristics, contiguity, strategy, agency cost effects and corporate structure), the franchisee (experience and involvement at the store level), and the franchisor/franchisee relationship (intrafirm conflict). Both the model and propositions will be empirically tested in the near future.

New perspectives on the causes of franchising conflict in Australia

Purpose – Although Australian franchising sector regulation promotes system disclosure and provides for mandatory conflict mediation, there is some concern that inequities exist within the conflict management process. From 2006 to 2008 no less than four government inquiries into franchising took place in Australia in an attempt to resolve problems occurring in the sector. A major issue was that of the perceived imbalance of power in the franchisor‐franchisee relationship, which often results in conflict between the two parties. The purpose of this paper is to extend the conflict literature in dyadic exchange relationships through investigating the causes of conflict from the franchisor and franchisee perspectives.Design/methodology/approach – Exploratory research is undertaken to identify the major causes of franchising conflict. Face‐to‐face interviews are conducted with 24 franchising experts, such as lawyers and mediators, to draw upon their considerable experience in the sector.Findings – The key find...

The Effective Delivery of Franchisor Services: A Comparison of U.S. and German Support Practices for Franchisees

ABSTRACT Conventional wisdom suggests that more services offered by franchisors should lead to fewer complaints from franchisees, and that franchisees ought to be better off with additional support provided. We set out to differentiate those services that are truly effective and are perceived as beneficial by franchisees from those that may have little effect or may even be perceived as counterproductive. Our survey targeted franchisors in the U.S. and in Germany, comparing the most mature franchise market globally to one that is relatively young. System disruption was found to be dependent on the maturity of the market, as little differentiation is provided in the very mature U.S. market, but considerable differentiation exists in the younger German market. Also, the size of the system matters, as bigger systems typically provide more services. Finally, different types of services have varying levels of effectiveness in the less mature franchise market of Germany.

Entrepreneurial franchisees have hidden superior marketing systems

Purpose – This research paper aims to understand the variability of performance among franchisees in a given system.Design/methodology/approach – A qualitative, case study approach was used to get a clearer and deeper picture of the main issues and parameters. Nine franchisees across three systems were interviewed, and the marketing and management practices of high and average performing franchisees were compared.Findings – Major contrasts have been identified between high and average franchisee performers, suggesting that entrepreneurial franchisees may have superior marketing and management systems that are not readily identifiable.Research limitations/implications – This study contributes to an eventual theory of effective marketing.Practical implications – Both franchisors and franchisees could use these findings to improve their marketing performance.Originality/value – Provides a case study to aid understanding of performance variability among franchisees.

Why Franchisors Discontinue Franchising but Continue Operating

DR. LORELLE FRAZER IS SENIOR LECTURER and Head of the School of Marketing, Griffith University Logan Campus, Brisbane, Australia. This paper provides a preliminary analysis of the strategic managemnent decision of franchisors to discoritinue franchising arrangements in favour of an alternative method of ownership. A sample of 14 ex-franchisors and seven of their ex-franchisees was interviewed to gather data on reasons and outcomes of the decision to cease franchisinig arrangements. The data analysis indicates that in general the firms were attracted to franchising because of resource constraints. However, the decision to adopt an alternative ownership strategy appears to be based on problems associated with human capital such as difficulties in motivating anid monitoring franchisees and economic factors such as the downturn in the economy during the 1990s.

Power and control in the franchise network: an investigation of ex-franchisees and brand piracy

This research considers the issue of franchisees who exit the franchise system in order to continue operating independently. The literature regarding incentives for entering franchising is reviewed in an attempt to reveal why franchisees become dissatisfied and leave. The use of power by the franchisor and its relationship to brand piracy by franchisees is explored. Franchisors and their current and former franchisees are interviewed to uncover insights into this phenomenon. Explanations concerning the effectiveness of contractual remedies, dissatisfaction with the franchise, level of dependence and expectations in the relationship, and franchisor-franchisee goal incongruence are proposed.

Mature franchise systems use multiple unit franchising to leverage learning economies and sustain systemwide growth

Purpose – This paper aims to extend current understanding of organisational choice theory through examining to what extent firm‐level factors influence the growth of franchisee‐owned mini‐chains within Australian franchise systems. In particular, this study examines how the age of the system, corporatisation of management processes, plurality of distribution, levels of intra‐firm conflict and franchise system complexity influence multiple unit franchising adoption.Design/methodology/approach – A qualitative methodology was adopted to gain a clearer picture of the salient issues influencing multiple unit franchising adoption from the franchisors perspective.Findings – The research reveals that mature franchise systems in Australia use sequential methods of multiple unit franchising expansion in order to minimise adverse selection costs and leverage learning economies derived from previous experiences in managing intra‐firm channel relationships.Research limitations/implications – Industry‐specific influen...

Servicing Customers Directly: Mobile Franchising Arrangements in Australia

This paper analyses operational differences between mobile franchising arrangements and fixed‐site franchises from an agency‐theoretic perspective. Almost 40 per cent of all franchised units in Australia operate as mobile or home‐based businesses, predominantly in service industries where products or services are provided directly to consumers. A two‐stage methodology is reported in this paper, incorporating quantitative and qualitative research methods. In stage one, data obtained from a survey of the population of Australian franchisors in 1998 are analysed to compare operational variables of mobile and fixed‐site franchise units. The second stage of the research employs in‐depth interviews with a sample of mobile franchisors and franchisees to further explore relevant issues. The results confirm the agency theory perspective that start‐up investment risk is lower in mobile units and mobile operations exhibit a higher level of repeat customers than fixed‐site franchises. No significant differences between the two arrangements are revealed in relation to the levels of franchisee monitoring, initial training or essential franchisee experience. This study indicates that agency theory contributes to our understanding of mobile franchising arrangements, yet also suggests the findings are not completely explained by agency theory. The results imply that both monitoring and alignment of incentives have complimentary effects and that both forms of contract are necessary in a franchisors control system.

Assessing Franchising Sector Maturity: Australian Evidence

Abstract Business format franchising in Australia has been consistently growing since the start of the 1970s. The development of the franchising sector has been traced through periodic surveys from 1988 to 1998 and the latest presents an opportunity to assess the level of maturity attained. No widely accepted basis exists for measuring maturity in a nations franchising sector. As a result, a framework for assessing the level of development is proposed, consisting of a number of attributes that may be expected to develop over time. The performance of Australian franchises is compared against these attributes wherever appropriate evidence is available from the surveys. The conclusion is reached that Australian franchising exhibits many of the attributes that indicate the achievement of a level of early maturity. Some aspects however have not yet developed to the extent expected. These offer opportunities for national franchise associations and governments to develop strategies strengthening franchise performance.