To be or not to be franchised? A knowledge-based perspective

Abstract

This paper investigates the rationale for choosing franchising rather than independent activity, arguing that this choice may be motivated by knowledge and competence considerations. We consider the franchise chain as a specific learning organizational form and explore whether this structure handles knowledge and builds competences according to an idiosyncratic pattern. Concretely, we empirically identify differences in the architecture of competences of franchised vs independent shops in the car maintenance industry in France, and analyse some causes for those differences. Thanks to in depth interviews coupled with lexical and quantitative analyses we find that franchised shops do master specific competences. However, the distinctive competences held by franchisees do not necessarily reflect franchisors’ knowledge, and are not exclusively the consequences of a shared identity in the franchise chain. We conclude that the development of franchise cannot be explained by competence-related arguments only, knowledge and competences being managed in distinctive ways within different franchising networks.

Keywords:

• franchising networks
• competence-based theory
• knowledge stocks and flows
• knowledge transfer

Acknowledgements

We would like to thank the French Franchise Federation for its support on this paper. Many thanks also to Prof. John Edwards for his fruitful comments on a former version of the paper.

Additional information

Notes on contributors

Caroline Hussler

About the authors

Caroline Hussler is currently Full Professor in Strategic Management at IAE-University of Lyon 3 and a research fellow of the Centre Magellan. Her main research interests lie in the determinants of territorial innovation and the stakes of social network building. Her works have been published in major international journals such as Research Policy, International Journal of Technology Management, Technological Forecasting and Social Change, Regional Studies, Economics of Innovation and New Technology, etc.

Patrick Ronde

Patrick Ronde is currently Associate Professor at UDS (University of Strasbourg, France) and research fellow at BETA. He is the former director of the GRAICO-lab (Research laboratory in economics and management dedicated to the analysis of innovation and learning in organizations). His main research topics are economics of knowledge, technology and innovation, geographical economics and decision-making science. His work (both econometrical and theoretical) has been published in major international journals such as Research Policy, Technological Forecasting and Social Change and Regional Studies.