International retailing operations: downstream entry and expansion via franchising

In this paper, the shift into international franchising from other forms of operation, rather than the typical home market franchising base, is explored. The focus is international retail franchising, based on a study of the Danish clothing and footwear industry. In this study it was found that Danish companies were moving into international franchising as an outcome of a more general shift from upstream wholesaling and subcontracting activities to downstream involvement in retailing activities. Preceding establishments of foreign subsidiaries and company-owned retail operations seemed to be important in facilitating the move into franchising.     

Large established firms entry into franchising: an exploratory investigation of strategic and operational issues

Although franchising is traditionally associated with newly emerging businesses which need to finance growth, this marketing technique is being increasingly utilized by large established firms as a method of business development. This article analyses the business objectives which led a sample of such firms in the UK to introduce franchising as a means of channel management. The modes of franchising-including the master franchise-selected by these firms as well as their operational and organizational experiences are investigated. In particular, there is an examination of the major managerial/cultural issues which these firms encountered in trying to reconcile the decentralized organization and operating methods implicit in the franchising concept with the centralized decision making and organization of a corporate concern. The implications for management of this dichotomy are explored.     

Retail Marketing Channel Franchise Failure

Abstract

The retail franchising channel is significant and growing rapidly in the U.S., U.K. and other countries. This paper presents a new retail strategic management perspective and provides new, more reliable U.S. longitudinal retail franchise government furnished data, covering over 800 franchise systems and over 250,000 franchise units.

A strategic management failure perspective and more accurate retail franchisee channel failure data facilitate understanding and mitigating failure. Retail franchisee channel failure is an important topic that merits further research and franchise system management attention.     

An Examination of International Retail Franchising in Emerging Markets

There has been an urgent call from both the franchise industry and the academic community for research on world franchising markets, specifically in the retail sector. This article is an attempt to summarize the main research that has been conducted thus far on international retail franchising. The article begins with an overview of the development of the literature and then discusses the nature and scope of emerging markets, with particular reference to their impact on the stakeholders of international retail franchising. Next, the article develops a conceptual model relating international retail franchising to its stakeholders. Then, a review of the research is divided into the areas of emerging world market: Central and Eastern Europe, Mexico and South America, Asia, and other areas that include India, Kuwait, and South Africa. The article concludes by discussing the next step to developing a research base for further understanding of emerging markets in addition to the opportunities and challenges for retail franchising and future research.     

Towards a framework for the study of franchising as an operating mode for international retail companies

In recent years franchising has become a popular operating strategy for companies competing in the global marketplace. In particular, international retailing companies have increasingly been adopting franchising as a marketentry mechanism. While this growth in the popularity of franchising has led to increased research interest in the topic, there has only recently been a recognition of the need to consider franchising within the wider context of retailer internationalization activity. This paper attempts to provide a framework for the study of franchising as a strategy for retailers expanding into international markets. The discussion examines key findings to date from the established literature on international franchising concerning the motivations underlying internationalization, the internationalization process itself and the operating problems encountered. It is argued that a careful examination of findings from the international franchising literature can provide further development of retail internationalization conceptualization.     

Franchising growth and franchisor entry and exit in the U.S. market: Myth and reality

Franchising has been and continues to be a very popular way to do business for a number of retailers and service businesses. However, the type of franchising that has been growing the most, namely business-format franchising, has not grown at the kind of phenomenal rates that the trade press often suggests. Since the Department of Commerce (DOC) canceled its publication Franchising in the Economy, we no longer have access to census-type data on franchising in the U.S. However, looking at the period during which the DOC did publish these data, one finds that the number of business-format franchisors is highly correlated with the number of units in these chains. Thus, we use data from recent issues of various franchisor directories to assess the number of franchisors in the U.S., and infer from this how business-format franchising has grown in the U.S. We find that business-format franchising has been growing over the last decade at a rate that is, at best, commensurate with the growth of the economy as a whole.We believe that the confusion about the extent of growth in franchising arises, in part, from the fact that many new firms enter into franchising each year, leading to the notion that this way of doing business is growing tremendously. However, we show that many firms also exit from franchising each year, for a net growth rate much below the entry rate.This paper shows that franchising is not a panacea for entrepreneurs, whether franchisor or franchisee. From the franchisor's viewpoint, the high rate of exits suggests that many firms fail despite franchising, and many others choose to stop franchising after trying it for a few years. Clearly, these firms have found that franchising is not right for them. Furthermore, the results show that the characteristics of the chain at the time it becomes involved in franchising, as described in the main franchisor directories—such as the royalty rate, the advertising fee, the franchise fee, the amount of capital required, and the sector of operation—have little capacity to explain “survival.” The main variable that affects “survival” among those that are typically reported in franchisor listings is the number of years that the franchisor has been in business before starting to franchise. Hence our results suggest this is one dimension in which franchisors can make decisions that affect the probability that they will be successful in franchising. Although we are unable to explain most of the variance in outcome, the results mostly imply that other, less easily observed or quantified characteristics of the chain and the franchisor, such as maybe the “innovativeness” of the product, the amount of support provided to franchisees, the financial backing of the franchisor, etc., likely influence “success” the most, and thus, are worth investigating further.From the perspective of franchisees, the amount of exit found here suggests that in the majority of systems, franchisees cannot expect that their franchisor will be around for the whole duration of their contract—which averages about 15 years according to the Department of Commerce. This does not mean that the majority of franchised businesses will find themselves in an “exiting” system—a small minority of very well-established franchisors accounts for the majority of franchised businesses, and these are likely to remain successful for years to come. But entrepreneurs buying franchises from less established systems are likely to face franchisor exit, either failure or departure. This paper confirms that franchisees should thoroughly investigate the franchise system they want to invest in, going beyond the information about royalty rates, advertising rates, rankings, etc., found in franchisor directories, and toward more product, market, and other less easily accessible information about the chain.     

Brand management in small and medium-sized (SME) retailers: A future research agenda

Abstract

Recently, an emerging body of literature has advocated the importance of branding to small and medium-sized (SME) retailers. Nonetheless, this discourse has ignored the complexities and idiosyncrasies of retail branding. The aim of this paper is to provide a new theoretical understanding of brand management by SME retailers. In order to achieve this aim, the paper integrates the brand management, SME branding, and retail branding literature, and offers a conceptual framework for SME retail branding. A number of propositions are included that aid understanding of brand management in SME retail organisations. It is anticipated that these propositions will help shape future empirical research in this area. Further in-depth research into the application of branding within the SME retail context would address a significant gap in academic knowledge. In doing so, it would also provide important insights for management practice.     

Organising Shopping Services: Trends in Canadian Retailing, 1972–87

This article argues that innovations in organisational form are the driving force behind changes in retailing. After describing the decline in the value added component of retail sales that has occurred in Canada since the early 1970s, it then argues that an analysis of this trend should situate retailing within the more encompassing framework of shopping and recognise the response of organisations to externalities arising in shopping activities. Organisational change economises on the costs of coordination by reassigning activities and changing the incentives that face interacting agents. The argument is illustrated with examples from shopping centres and franchising.     

Examining the Drivers for Franchised Chains Performance through the Lens of the Dynamic Capabilities Approach

This paper draws on the dynamic capabilities approach to explain the performance of franchised chains. This approach is a useful lens to understand why some chains are more likely to drive superior performance than others. Hence, using this theoretical lens, we explore why and how several characteristics of franchised chains influence sales performance. This study includes 189 retail and service chains operating in the United States. Findings show that experience before franchising, length of training, chain age, franchising fees, and level of internationalization positively impact performance of franchised chains, whereas the proportion of franchised units has a curvilinear influence (inverted‐U shape) on chains' performance. Implications for franchising scholars and practitioners are discussed.     

Franchising choice in retail networks: a multi-level institutional framework

Franchising is one of the most dynamic forms of organization for retail networks. Conceptualized as a hybrid form by transaction cost theory, franchising outlets are supposed, in the long run, to be bought by franchisors in order to capture residual rents. However, franchising persists a long time and still represents one of the favorite means to cover territories. This article suggests that this persistence of franchising in the organization of retail networks can be explained by institutional theory. The article also argues that institutional forces exert their influence at multiple levels. Based on this, a set of seven research propositions are developed, setting out a research agenda in this area.     

入世二十年外资零售企业在中国的发展趋势变化：影响因素与经验证据

截至2021年底，中国加入世界贸易组织已满二十年，外资零售企业在中国市场上经历了“先升后降”的发展过程，并出现了退出市场的现象。文章以产业组织理论的基本框架为指导，分阶段对影响外资商业发展水平的因素进行检验。结果表明：中国庞大的潜在市场始终是影响外资商业进入的主要因素；外资零售企业在中国市场上存在一定的区域差异，且区域间的影响因素的作用效果不同；电子商务等零售业创新发展方式的普及对外资商业在中国零售市场上的经营产生了较大的负面影响，外资零售巨头在此轮产业调整中受到了冲击，并开始了经营方式的调整与店面的收缩。     

On the failure of mutual fund industry regulation

Mutual funds grant retail investors access to professional asset management and facilitate exposure to financial markets. The academic literature and regulators have traditionally focused on issues such as portfolio diversification, performance, liquidity, and management fees in attempts to analyze and improve market efficiency. Scarce attention has been paid to market risk management. There is unanimity on this issue throughout the world. The lack of regulatory attention creates a gap, which is partially covered by mutual fund rating agents and asset management analysts. Those agents base their ratings on various rating methodologies — which engenders a wide array of difficulties, especially for retail investors. We employ proprietary data on historic mutual fund ratings in Israel and show that retail investors do not necessarily benefit from this diversity of opinions. Furthermore, we find that the voluntary implementation of quantitative risk measurement techniques by certain mutual funds tends to be associated with fewer outflows and greater inflows in these funds. Interestingly, the application of (backward-looking) value-at-risk analysis is associated with fewer outflows, while (forward-looking) stress-testing techniques are associated with greater inflows. Given the similarity of mutual fund industry environments across the globe, our results have worldwide applicability.     

Organisation and Control in Retail Buying Groups

Retail alliances are a mechanism which enables small and medium retail businesses to compete with corporate retail chains. Alliances face different organisational problems from those of corporate chains because of the need to ensure convergence of interests between the individual member and the organisation as a whole. This paper examines how retail buying groups organise in terms of membership structures, control mechanisms, incentive structures and management systems to meet these needs. A study of retail buying groups in the United Kingdom is reported. Results show that these groups are not mirror images of corporate retail chains but vehicles to preserve the independence of their members through voluntary participation and democratic control structures.     

US small retail businesses’ perception of competition: Looking through a lens of fear,confidence, or cooperation

The U.S. retail industry has undergone dramatic changes, leading to the closing of brick-and-mortar retail stores on a large scale. Understanding perceived market competition among small retail businesses may help explain why certain businesses survive or fail in the altered retail environment. This study investigates small retail businesses' perceptions of competition within/outside the community, underlying reasons for their perceptions, and variations in perceptions by different business characteristics. Contrary to common expectations, we found that more than half of businesses interviewed were optimistic in the face of competition. Our data reveal two salient underlying reasons for pessimism and five for optimism. These perceptions tended to differ by operational locality (urban clusters vs. urban areas), business revenues, and innovativeness. Based on the findings, we developed propositions and a framework of small businesses' perceived competition and sustainable competitive advantage. We discussed theoretical and practical implications for small retail businesses’ sustainable growth in the challenging retail environment.     

Franchising and the choice of self-employment

This paper reports the findings of a study of the decision to purchase a franchise within the broader context of the decision to become self-employed. The sample is taken from individuals who had indicated an interest in self-employment and franchising three years prior to the current study. In the interim, some had purchased franchises, some had opened or bought independent businesses, and some had remained employed by others. The differences among these groups are examined. Some support was found for the posited relationship between the personal benefits of self-employment and the decision to purchase a franchise or independent business. The importance attached to the financial and business benefits of franchising is positively related to the decision to purchase a franchise. Finally, there was some evidence that franchising offered greater choice of sectors. Franchisees were less likely than independent business owners to operate within sectors where they had previous experience.     

Corporate Social Responsibility in franchise chains: Specificities,insights from French franchise chains’ CSD,and avenues for future research

Although franchise chains are increasingly committed to environmental, social, and societal transitions, only a few researchers have focused on Corporate Social Responsibility (CSR) in the specific case of franchising. The aim of our paper is to discuss the specificities and challenges of CSR in franchising, explore how franchisors report on their sustainable practices, and emphasize subsequent directions for future research. In order to do so, we focus on the Corporate Social Disclosure (CSD) practices of twenty-two retail and service franchisors operating in the French market where regulations of non-financial information disclosures exist for large companies. Our findings show that these franchisors disclose rich and diversified information about their CSR activities. However, franchisors’ disclosures can vary significantly, especially depending on their chain size and whether they are subject to reporting regulations. Our research contributes to the literature on CSR in franchise chains, as well as the practice.     

Good Morning,Vietnam! Opportunities and Challenges in a Developing Franchise Sector

Until recently the development of franchising in Vietnam was hampered by a regulatory framework that did not recognize franchising as a discrete business relationship. The introduction of Vietnam's Franchise Law in 2005 provided, for the first time, a legal foundation for franchising, which was a necessary prerequisite for sector development. Although there are currently few business format franchise systems operating in Vietnam, there is an increasing presence of established international franchise systems and increasing numbers of local systems albeit at an early “product distribution” evolutionary stage. Moreover, the commercial environment for franchising is increasingly favorable: Vietnam is the fastest growing Asian economy after China and India and is experiencing strong gross domestic product growth and annual retail growth. This article addresses the development of franchising, and the challenges and opportunities for franchisers in Vietnam.     

Criteria for Responsible Business Practice in SMEs: An Exploratory Case of U.K. Fair Trade Organisations

This paper develops a set of 16 criteria, divided into four groupings, for responsible business practice (RBP) in Small and Medium-Sized Enterprises (SMEs) drawn from the existing SME/RBP literature. The current lack of a general set of criteria against which such activity can be judged is noted and this deficit is redressed. In order to make an initial assessment in support of the criteria so derived, an exploratory feasibility study of RBP in U.K. Fair Trade organisations was conducted. The findings from this study show that most but not all of the RBP criteria seem to be applicable to U.K. Fair Trade organisations but it is recommended that the complete set of criteria continues to be used in further research until such time as there is a general consensus as to which criteria are appropriate. Implications for RBP in small businesses in general, and for Fair Trade organisations in particular, are drawn out and suggestions for further research are identified.     

Differences in Male and Female Management Characteristics: A Study of Owner-Manager Businesses

The rise in the number of female managers in recent years has fuelled the debate whether their management characteristics differ in any way from their male counterparts. While most researchers have tended to analyse these gender-related differences within large organisations, this study sets out to explore whether gender has an impact on management characteristics of male and female business owner-managers. In particular, the focus is on the management of established businesses, rather than start-ups. The management characteristics are studied in terms of (1) the owner-manager's managerial style, (2) the nature of the organisational structure, (3) the degree of delegation within the organisation, (4) the manner in which strategic objectives are set, and (5) the importance of personal objectives in the decision making process. In view of its findings that there are significant differences between male and female owner-managers in the way they manage their businesses, the paper considers implications for theory and policy.     

The Application of a Relationship Marketing Perspective in Retail Banking

This article considers the development of relationship marketing in retail financial services. It begins by examining the relationship marketing literature and considering its application to the retail banking industry. Following a discussion of the research methodology, four in-depth retail bank case studies are presented. These cases form the basis of a qualitative analysis of the state of relationship marketing in retail banking. Many banks have already reached a higher level of relationship marketing than businesses in other sectors. Yet generic relationship marketing models such as the one applied in this research do not necessarily reflect these differences. A modified version of a relationship marketing model, which caters for the particular characteristics of retail banks and which may be applicable to other services businesses, is therefore proposed.