Turning aligned interests into higher chain performance in franchising

Abstract

Purpose This study aims to study research on franchise chain performance that has focused on franchisors’ efforts to align their interests with those of franchisees to address partner uncertainty. In contrast, the question of what a franchisor should do to address another type of uncertainty and task uncertainty remains understudied. The authors suggest a franchisor’s coordination as a key means of alleviating task uncertainty and ongoing support and plural form as two mechanisms of coordination. The authors also posit that aligned interests between the franchisor and the franchisee improve, whereas one-sided interest impedes, chain performance. Furthermore, providing greater ongoing support or deploying plural form amplifies the positive effect of aligned interests on chain performance. Design/methodology/approach The authors relied on secondary data to test the hypotheses. The authors collected data for analysis from Bond’s franchisee guide and Nation’s Restaurant News restaurant database. They also tested the framework by analyzing 17-year, panel data of 71 restaurant chains operating in the USA and Canada using system generalized method of moments. Findings Results show that aligning interests does improve chain performance, but that the positive effect is amplified when aligned interests are matched with a chain’s provision of ongoing support or use of plural form. Originality/value The authors explicate why it is not enough to address the misaligned interests or lack of coordination alone; a chain manager needs to address both of these problems together. In addition, the authors explicate how two franchisee coordination mechanisms – ongoing support and plural form – help a chain augment the beneficial effect of aligning interests on chain performance. Without solving the twin problems of misaligned interests and coordination simultaneously, a chain is unlikely to achieve its full performance potential.

The role of ICTs for knowledge sharing in franchising networks

“…Collectively, the extant literature informs us that, although scholars have examined franchise networks in a number of contexts yet, little is known about how knowledge is transferred (Kim and Gill, 2022; Bretas and Alon, 2021; Iddy, 2020; Iddy and Alon, 2019). Additionally, recent studies examining the domain indicate many questions that must be answered to understand the aspects that differentiate business dynamics in the LAC region (Prieto-Sánchez and Merino, 2022).…”