Analysis of franchisors' expansion strategies and competition

Abstract

Franchising provides a channel for small businesses to grow successfully into nationwide or even worldwide chains. Franchising is considered to be common among chain stores, of which the convenience store is a typical example. This study aims to examine the expansion strategy of each individual convenience store franchisor and the competition to expand among the franchisors. Taiwan is considered to have the highest convenience store density in the world. This study performs empirical analyses of four major convenience store franchisors in Taiwan, namely, 7-Eleven, Family Mart, Hi-Life, and OK. The evidence shows that the franchisors tend to be slow to expand when facing a highly dense competitive environment. There exists a strong first-mover advantage in convenience store franchising. The first mover (7-Eleven) has played a dominating role throughout the years. As a result, the franchisors' outlet shares have remained relatively stable.

Keywords:

• competitive intensity
• entrepreneurship
• franchising

Acknowledgements

Special thanks to the Editor of The Service Industries Journal, Professor Eileen Bridges, for providing valuable help in constructing the hypotheses in this paper.

Funding

The authors acknowledge and are grateful for the financial supports by the National Science Council, Taiwan, ROC, under grant [NSC 100-2410-H-035-006-MY2, NSC 101-2410-H-035-004, NSC 102-2410-H-035-038-MY2, and NSC102-2410-H-035-041-MY2].