Fairness in franchisor–franchisee relationship: an integrative perspective

Abstract

Purpose This paper aims to elucidate and extend the concept of power and fairness in the context of franchisor–franchisee relationship. Design/methodology/approach On the basis of Dul and Hak’s (2007) recommendations, the conceptual model is developed from closely related domains (e.g. channel relationship) using pertinent theories. On the basis of this comprehensive analysis, new propositions about fairness in a franchisee–franchisor context are drawn. The primary purpose of this research is to conceptually and theoretically further the understanding of antecedents and consequences of fairness in a franchisor–franchisee relationship context by proffering a framework. Finally, this study examines the concept of fairness of its antecedents and moderators that have received scant attention in the context of franchising research. Findings This study contends that non-coercive power is perceived fairly. Also, coercive power that is legitimate is perceived fairly. However, coercive power that is illegitimate can be detrimental to relationships between franchisee and franchisor. Furthermore, a franchisee who perceives the relationship to be fair is likely to place more trust in relationship, is more satisfied with relationship and is less likely to be opportunistic. Finally, the study contends that these relationship outcomes are dependent on the franchisee’s personality traits. Research limitations/implications One major limitation of this study is that the propositions have not been empirically tested. However, this paper cites several business cases that have been used to support the propositions proffered in the study. Our conceptual model supported by previous theoretical findings and industry cases suggests that it is important to focus on social dimensions along with economic costs of a franchisor–franchisee relationship. Future researchers may empirically examine the relationships posited in this study by using the primary industry data. Originality/value This paper takes a comprehensive view of various social constructs affecting a franchisor–franchisee relationship. It also highlights the role of individual personality factors in a franchisor–franchisee relationship, extends prior work on relational dimensions from channels to the franchising context and provides managerial conclusions.

Fairness of the NPD partnership’s financial distribution pie

“…The results of our empirical research are in line with Kim et al (2017), who also concluded that fairness contributes to the innovation performance of supplier-buyer partnerships. Additionally, we were able to confirm the conclusions of Shaikh et al (2018), showing that suppliers who perceive the partnership to be fair are less likely to be opportunistic. This study, therefore, alerts managers to refrain from cannibalizing the partnership’s pie-sharing for realizing an immediate financial surplus at their partner’s expense, as it harms both the partnerships and the firm’s own lasting performance.…”

A model of entrepreneurship education in franchising – application of outside-in marketing with a behavioural focus

“…franchisors). Previous research has demonstrated that franchisor – franchisee relationship quality is an important driver of franchise growth (Shaikh et al , 2018). Therefore, it can be suggested that an effective EE program has a positive impact on the franchise performance through its influence on the EE participants i.e.…”

“…The EE intervention was focused on the behavioural outcomes of “would-be” entrepreneurs including their decision-making competencies in recognising and evaluating opportunities to enter franchising as franchisees and to operate their business successfully. Although franchising offers individuals a business model that involves reduced risk, high rates of conflict are still evident within many franchise sectors around the world (Bordonaba-Juste et al , 2011; Frazer et al , 2014; Perry et al , 2002; Shaikh et al , 2018). Indeed, problems associated with incomplete information, lack of business acumen and inadequate due diligence during the pre-entry decision making stage have been said to foster the creation of unrealistic expectations (regarding future performance of the franchise unit), manifesting in negative behavioural outcomes such as dissatisfaction and conflict (Giddings et al , 2010; Weaven et al , 2010).…”

Impact of power on channel members’ behavior: evidence from India

“…Power, in general terms, refers to the ability of an entity to influence the action of another entity (Chicksand, 2015; Shamdasani et al , 2001). In any business relationship, power plays an important role in the growth of channel leader and members (Shaikh et al , 2018). The synchronization of goals between channel members is very crucial for realizing the growth potential (Sadarangani, 2013; Jain et al , 2014).…”