Impact of the industry on franchise chain efficiency: a meta-DEA and context-dependent DEA approach

Abstract

A meta-DEA (Data Envelopment Analysis) approach is used to analyse the impact of the industry in which the franchisor operates its business on its chain efficiency by comparing chain efficiency between and across industries (retail versus services). To provide realistic short-term and long-term objectives to inefficient chains, a level-by-level benchmarking path is developed with the context-dependent DEA approach. Furthermore, the joint implementation of both approaches enables an identification of chains for which the industry influences their efficiency, an evaluation of the efficiency share that results from industry-specific factors rather than factors common to the franchise sector as a whole, and the characterization of an implementable and achievable benchmarking defining level-by-level improvements of chain efficiency and taking into account chain characteristics. Such an analysis can help franchisors to define their future strategic and managerial orientations.

Keywords:

• Data Envelopment Analysis
• franchising
• meta-DEA analysis
• context-dependent DEA analysis
• benchmarking

Acknowledgements

The authors sincerely thank the French National Research Agency (references: FRANBLE – ANR-12-BSH1-0011-01) and the Human Sciences Institute in Brittany (reference: FRANNET) for their valuable support.