Faculty & Research
When Does Franchising Help Restaurant Chain Performance?
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Vol 47 No 1
By: James G. Combs, David J. Ketchen Jr. and John W. Upsong
Executive Summary: A study of ninety-four food-service chains revealed four distinct groups relating to strategic use or avoidance of franchising. The four groups are as follows: manager-scarce franchisors, money-scarce franchisors, franchising minimizers, and seasoned veterans. The use of franchising by the manager-scarce and money-scarce franchisors supports the concept that youthful companies take up franchising to gain access to resources in an economical fashion. Franchising minimizers avoided the potential tangles of franchise-related agency, most likely because they wanted to maintain control of their strong brand names and relatively complex operating systems. The seasoned veterans had been in business the longest but were driven by neither agency concerns nor resource scarcity. They made modest use of franchising; some for many years and some only recently. While their growth was not speedy, their financial performance ranked with franchise minimizers. This group also enjoyed long tenure of managers, meaning that its members did not face scarcity of human resources.
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- When Does Franchising Help Restaurant Chain Performance? By: James G. Combs, David J. Ketchen Jr. and John W. Upsong
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