Franchise channel relationships: a cross-country comparison

Manaresi, A (1993) Franchise channel relationships: a cross-country comparison. Doctoral thesis, University of London: London Business School.

Abstract

Franchising is very widespread. Typically, it is seen as a standardized business in that the same basic format can be developed in different countries, with only small adjustments to local market conditions. These levels of standardization are most apparent at the consumer end of the business. The focus here, by contrast, is on the internal management of franchise networks in different countries. We find that the same model of inter-organizational relationships in franchise networks can be successfully applied across countries, specifically Britain and Italy. Extensions of previous research have been carried out on issues related to the powerconflict process; new variables, such as the interaction between franchisees have been added to the model; and the inter-relationships between these variables have been tested using a linear structural model (Lisrel). Perceptual data about inter-organizational relationships in franchise networks were collected with personally administered questionnaires from both franchisors and franchisees of the same retail franchises. To ensure cross-country comparability the sample was only drawn from retail business format franchises (such as fast food and mass market clothing, not franchised services such as builders and plumbers). Analysis shows that the power sources franchisors use has an impact on the dependence of franchisees; these power sources also affect the vertical conflict between franchisors and franchisees, and the way the decision structure of the franchise is perceived. Conflict has a role in affecting the Italian franchisees performance, and a similar but weaker result was obtained among British franchisees. The power-conflict process affects the way franchisees interact with each other: for example, the more vertical conflict (between franchisor and franchisee), the more horizontal information exchange (among franchisees). The fact that franchisees interact with each other does not decrease their perceived dependence on the franchisor. These results imply that franchise channels should be looked at as networks where not only vertical one-to-one (franchisor-franchisee) relationships are important, but also where horizontal linkages have an influence and where other complex relationships exist.