Franchise management capabilities and franchisor performance under alternative franchise ownership strategies |
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| Affiliation: | 1. Department of Management, Mitchell College of Business, University of South Alabama, 5811 USA Drive S., Mobile, AL 36688-0002, USA;2. Department of Management, College of Business, University of Central Florida, 12744 Pegasus Dr., Orlando, FL 32816-1400, USA;3. Telfer School of Management, University of Ottawa, 55 Laurier Ave E, Ottawa, ON, K1N 6N5, Canada;4. Narendra Paul Loomba Department of Management, Zicklin School of Business, Baruch College, City University of New York, One Bernard Baruch Way, Box B9-240, New York, NY 10010, USA;1. Kelley School of Business, Indiana University, Bloomington, IN 47405, USA;2. Stern School of Business, New York University, New York, NY 10012, USA;3. Alberta School of Business, University of Alberta, Edmonton, AB T6G 2R6, Canada;1. Technical University of Munich, TUM School of Management, Arcisstr. 21, 80333 München, Germany;2. Université Libre de Bruxelles, Solvay Brussels School Economics and Management, Avenue FD Roosevelt 50, 1050 Brussels, Belgium;3. University of Oklahoma, Price College of Business, 307 W. Brooks St., Norman, OK 73069, United States;4. Mendoza College of Business, University of Notre Dame, Notre Dame, IN 46556, United States;1. Muma College of Business, University of South Florida, 4202 East Fowler Avenue, Tampa, FL 33620, United States of America;2. Cameron School of Business, University of North Carolina Wilmington, United States of America;1. Texas Christian University, Departments of Entrepreneurship & Management, Neeley School of Business, United States of America;2. Indiana University, Department of Management & Entrepreneurship, Kelley School of Business, United States of America |
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| Abstract: | Franchising is a key entrepreneurial growth strategy, but a well-known downside is franchisee free-riding. Drawing upon alliance capabilities research, we describe franchise management capabilities and suggest that they are one way franchisors reduce free-riding and thus enhance performance. We also submit that these capabilities are especially helpful for “plural form” franchisors who own outlets in parallel with franchisees. Using a sample of 229 franchisors, we show that franchise management capabilities relate positively to franchisor performance among plural form franchisors. For “turnkey” franchisors who franchise all, or almost all, outlets these capabilities relate indirectly to performance through lower opportunism and improved brand reputation. Franchise management capability is therefore an important new theoretical construct linking franchising to franchisor performance. |
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