PurposeThis study aims to reveal the impact mechanism of franchisor-owned resources, franchise relationship quality and franchisee's dynamic capabilities on franchisee performance, with the moderating role of cultural sensitivity.Design/methodology/approachThe sample consisted of 290 middle managers and team leaders at 113 hotels and food and beverage settings participating in the international- and domestic franchises in Ho Chi Minh City, Vietnam. A partial least squares structural equation model (PLS-SEM) is used to analyse the data.FindingsThe result reveals that franchisor-owned resources, franchise relationship quality and franchisee's dynamic capabilities significantly impacted franchisee performance. Furthermore, cultural sensitivity has a beneficial role in the effect of franchise relationship quality on franchisee performance.Originality/valueThis study develops an integrated analytical framework of franchisee performance from the franchisee's perspective, contributing to integrating international business theory in franchising studies, namely the resource-based view, dynamic capability view and relationship-marketing theory.