Bottled up entrepreneurial capabilities: a case of franchise termination by the franchisee  

Oleh:

Hussain, Dildar ; Pommy, Marion

Jenis: Article from Proceeding
Dalam koleksi: SIBR-Thammasat 2014 Conference on Interdisciplinary Business & Economics Research June 5th- 7th, 2014 di Emerald Hotel Bangkok, page 1.
Topik: Franchise termination; franchisee’s entrepreneurial capabilities; qualitative approach; case analysis
Fulltext: b14-101.pdf (8.99KB)

Isi artikel

This study aims at investigating the causes and possible consequences of franchise termination by franchisees. We investigate the role of franchisee’s entrepreneurial capabilities in triggering franchise termination. The existing literature on franchising suggests that termination of franchise agreements mainly results from conflicts in the network and due to performance related issues. However, none of previous studies investigate the franchise termination due to entrepreneurial ambitions of the franchisee. This exploratory study offers some preliminary findings in this direction, which can serve as a basis for the future research on franchise termination investigating reasons other than conflicts and performance issues. The study employs a qualitative approach to investigate a case of franchise termination by the franchisee. In-depth interviews were conducted with the management, employees and customers of the franchisee firm. In addition, observations and secondary data sources were also used to compliment the primary data. The findings suggest that it is very important for a franchisor to select franchisees with the “optimal level” of entrepreneurial capabilities. Franchisees with very high ambitions and having a very high level of entrepreneurial capabilities may feel that cannot fully exploit the market opportunities due to strong franchisor control and hence may opt to exit the franchise system. From franchisee’s point of view, this type of decision may have adverse effects on the motivation of employees and may increase employee turnover rate, at least in short term. On the other hand business customers and individual customers may have different impact of a firm’s exit from the franchise system. The findings are based on one case only, hence may have limited generalizability. The number of interviews particularly with customers is small and the findings should be seen subject to these limitations. Another possible limitation of the study is that we could interview only staff members who were still working with the firm. We did not have access to the past employees who left the firm after it announced the termination of franchise agreement

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