Franchisor-franchisee relationships

Frazer, Lorelle; Grace, Anthony

doi:10.4337/9781785364181.00021

Cited by 5 publications

(7 citation statements)

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“…Franchising "takes the form of a legal contract between the owner of a trademark (the franchisor) and independent business owners (franchisees) to operate under the owner's trademark to sell products or services in accordance with the owner's 'blueprint'" (Cox & Mason, 2009, p. 503). Although the franchisor and the franchisee operate individual businesses, they are both under the authority of a single brand, and they are bound together by the franchisor's system, standards and processes (Frazer & Grace, 2017). This governance structure creates challenges for franchisee entrepreneurship because of the franchisor's expectations of franchisee conformity, despite the franchisee's desire for autonomy (Dada, 2018;Dant & Gundlach, 1999;Hoy, 2008).…”

Section: International Franchising and Franchisee Entrepreneurshipmentioning

confidence: 99%

Entrepreneurial process in international multiunit franchise outlets: A social capital perspective

Hadjielias

Dada

Eliades³

2021

Journal of Business Research

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Section: International Franchising and Franchisee Entrepreneurshipmentioning

confidence: 99%

Entrepreneurial process in international multiunit franchise outlets: A social capital perspective

Hadjielias

Dada

Eliades³

2021

Journal of Business Research

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“…Since that time, franchising has become a worldwide phenomenon (Blair and Lafontaine, 2005). While debate continues over an absolute definition of franchising (see Frazer andGrace, 2017 in Hoy et al, 2017), we adopt Curran and Stanworth's (1983) popular working definition, defining franchising as a business model in which one entity (the franchisor) enters into a contract with another entity (the franchisee) who is independently financed to operate under the franchisor's trade name as an owner-manager providing a good or service using a market-tested format specified by the franchisor. As a condition of using the franchisor's format or model, franchisees also typically pay royalties and/or an upfront fee (Stanworth and Curran, 1999: 326).…”

Section: Literaturementioning

confidence: 99%

Are franchisees more prone to employment standards violations than other businesses? Evidence from Ontario, Canada

Easton¹,

Noack²,

Vosko³

2023

Preprint

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<p>Using an administrative dataset from the Ontario Ministry of Labour, we investigate three hypotheses about employment standards violations among franchised businesses: (1) franchisees have a higher probability of violating employment standards than other businesses, (2) franchisees have a higher probability of monetary/wage-related ES violations than other businesses, and (3) franchisees have a lower probability of repaying monetary/wage-related violations than other businesses. The results of our statistical models suggest that overall, franchisees are indeed more likely to violate ES, have a higher probability of monetary/wage-related violations, and are less likely to repay such violations. However, the results vary substantially by industry. While franchisees had only marginally higher probabilities of an ES violation in two of the seven industry-groups examined, five of the seven industries showed substantially higher probabilities of a monetary violation. The results also show that franchisees in three industry groups (retail, accommodation and food services, and education, public administration, healthcare and social services) are particularly prone to monetary violations. </p>

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“…Therefore, both parties will accept only royalty rates they perceive as “fair,” taking into account their individual goals and perceived risk of moral hazard. On the one hand, franchisors and franchisees pursue divergent goals: whereas franchisors are primarily interested in growing the franchise to maximize sales (i.e., more revenue through royalties), franchisees are primarily interested in maximizing the profitability of their franchise units (i.e., more residual income after paying the fees to the franchisor) (Frazer and Grace 2017; Nair, Tikoo, and Liu 2009). 3 On the other hand, franchisors’ and franchisees’ perceptions of risk of opportunistic behavior likely depend on characteristics of the host market and the contract itself.…”

Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 99%

“… 3 Because franchising tends to attract people who want to “become their own boss,” despite limited business experience and technical skills, many franchisees also strive for autonomy and independence (Frazer and Grace 2017), which constitute other potential sources of tension.…”

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confidence: 99%

What Drives Royalty Rates in International Franchising?

Zeißler¹,

Mandler²,

Kim³

2022

Journal of International Marketing

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Royalty rates are an essential contractual provision to reduce the risk of opportunism in franchising partnerships, many of which are international. However, extant research provides limited insights into the factors that determine the level of royalty rates in international franchise agreements. To address this gap, the authors conceptualize and empirically test a model that treats country characteristics (economic potential, legal rights protection, and cultural distance) and contract characteristics (territorial exclusivity and contract duration) as drivers of royalty rates, accounting for product-market profile and service type as potential contextual factors. Using a unique data set comprising 125 international franchising contracts between franchisors and franchisees from 19 countries, the authors find that economic potential (but not territorial exclusivity) is associated with higher royalty rates while legal rights protection, cultural distance, and contract duration are associated with lower royalty rates. While these relationships are robust across B2C and B2B markets, the impact of economic potential (legal rights protection) on royalty rates is more (less) pronounced for people-processing services, compared to possession-processing services. This work extends the literature exploring the contracting stage of international franchising and provides insights that inform franchisors’ and franchisees’ decisions related to the design of such contracts.

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Franchisor-franchisee relationships

Cited by 5 publications

References 0 publications

Entrepreneurial process in international multiunit franchise outlets: A social capital perspective

Entrepreneurial process in international multiunit franchise outlets: A social capital perspective

Are franchisees more prone to employment standards violations than other businesses? Evidence from Ontario, Canada

What Drives Royalty Rates in International Franchising?

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