Examining the Drivers for Franchised Chains Performance through the Lens of the Dynamic Capabilities Approach

We gratefully acknowledge the support of the French National Research Agency (ANR‐12‐BSH1‐0011‐01—ANR FRANBLE) and the Human Sciences Institute in Brittany (MSHB‐FRANNET). We thank Editor Marko Grünhagen and the anonymous reviewers for their comments. We are also grateful to Gérard Cliquet, Begoña López Fernández, and Kelly Prioux for their suggestions, and the participants at the 4th International Conference on Economics and Management of Networks (2009) for their comments on a preliminary draft.

Abstract

This paper draws on the dynamic capabilities approach to explain the performance of franchised chains. This approach is a useful lens to understand why some chains are more likely to drive superior performance than others. Hence, using this theoretical lens, we explore why and how several characteristics of franchised chains influence sales performance. This study includes 189 retail and service chains operating in the nited tates. Findings show that experience before franchising, length of training, chain age, franchising fees, and level of internationalization positively impact performance of franchised chains, whereas the proportion of franchised units has a curvilinear influence (inverted‐ shape) on chains' performance. Implications for franchising scholars and practitioners are discussed.

We gratefully acknowledge the support of the French National Research Agency (ANR‐12‐BSH1‐0011‐01—ANR FRANBLE) and the Human Sciences Institute in Brittany (MSHB‐FRANNET). We thank Editor Marko Grünhagen and the anonymous reviewers for their comments. We are also grateful to Gérard Cliquet, Begoña López Fernández, and Kelly Prioux for their suggestions, and the participants at the 4th International Conference on Economics and Management of Networks (2009) for their comments on a preliminary draft.

We gratefully acknowledge the support of the French National Research Agency (ANR‐12‐BSH1‐0011‐01—ANR FRANBLE) and the Human Sciences Institute in Brittany (MSHB‐FRANNET). We thank Editor Marko Grünhagen and the anonymous reviewers for their comments. We are also grateful to Gérard Cliquet, Begoña López Fernández, and Kelly Prioux for their suggestions, and the participants at the 4th International Conference on Economics and Management of Networks (2009) for their comments on a preliminary draft.

Notes

We gratefully acknowledge the support of the French National Research Agency (ANR‐12‐BSH1‐0011‐01—ANR FRANBLE) and the Human Sciences Institute in Brittany (MSHB‐FRANNET). We thank Editor Marko Grünhagen and the anonymous reviewers for their comments. We are also grateful to Gérard Cliquet, Begoña López Fernández, and Kelly Prioux for their suggestions, and the participants at the 4th International Conference on Economics and Management of Networks (2009) for their comments on a preliminary draft.

9. The relationship between fees/royalties and performance can be bidirectional. High fees/royalties allow franchised chains to have access to more financial resources that can improve the chain's performance. Yet franchised chains that outperform their competitors can afford to ask for high fees and royalties. In this paper, only the former argument is relevant for the dynamic capabilities approach. We thank an anonymous reviewer for pointing this out.

10. The relationship between chain internationalization and performance can be bidirectional. Franchisors can use their success on the domestic market, that is, their high level of performance, to expand their business at the international level. Yet franchisors can use their international experience to reinforce their success on the domestic market, that is, achieving high levels of performance. In this paper, the latter argument seems more relevant according to the dynamic capabilities approach. We thank the editor for pointing this out.

11. As the sample size was acceptable, we reran the analyses using hierarchical regressions without bootstrapping. Results had similar significance levels and negligible changes in coefficient values. Based on the recommendations of Efron and Tibshirani (1993), and Paige, Trindade, and Fernando (2009) concerning the non‐normality of the quadratic terms, we decided to retain results of bootstrapping.

We thank an anonymous reviewer for pointing this out.

12. The value is determined based on the first derivative of the dependent variable regarding the independent variable (proportion of franchised units). The computing formula is explained in Silberberg E. and W. Suen (2001), The Structure of Economics—A Mathematical Analysis, 3rd ed. Singapore: McGraw‐Hill Higher Education.

Additional information

Funding

French National Research Agency

Funding

Human Sciences Institute in Brittany

Notes on contributors

Assâad El akremi

Assâad EL Akremi is Associate Professor in Université de Toulouse 1—Capitole, CRM (UMR 5303 CNRS).

Rozenn Perrigot

Rozenn Perrigot is Associate Professor at the Graduate School of Management (IGR‐IAE)—University of Rennes 1, Affiliate Professor at ESC Rennes School of Business, and Research at CREM UMR CNRS 6211.

Isabelle Piot‐lepetit

Isabelle Piot‐Lepetit is Senior Researcher Fellow in Economics at INRA UMR 1110 MOISA, Montpellier.