Although multi‐unit ownership has become the dominant form of franchising in the United States, the motivations for either franchisor or franchisee to participate in these agreements continue to be the subject of debate. This study looks at the issue from the perspective of the franchisee. It is argued that some multi‐unit franchisees, especially those operating as area developers, are likely to enter the field viewing their franchise as an investment, while others, especially those operating as sequential multi‐unit operators, are likely to view their franchise as an opportunity to fulfill more personal, entrepreneurial ambitions. A study of multi‐unit franchisees of both types found that both were equally investment‐oriented but that the sequential multi‐unit operators were more likely to seek fulfillment of entrepreneurial goals. Implications for practitioners and for future research are discussed.
The degree to which a franchise system penetrates a target market over time often is influenced by the rate to which its individual franchisees expand. Yet a franchisee's decision to expand the business operation depends, in part, on the perception of value that the franchisee expects to receive from the franchisor in return for a variety of fees (for example, entry fee, advertising fees, royalties). Moreover, the franchisee's experience with its franchisor may strengthen or weaken his or her perception of franchisor value. The change in perception of franchisor value can influence franchisees’ decisions to expand their franchise operations. To date, scant research exists on factors influencing a franchisee's decision to expand. In the reported study, a four‐stage analysis was conducted to examine empirically whether franchisees’ opinions about the value of their franchisors changes over time. The study findings reveal that franchisees had the strongest, positive opinions when asked to recall an earlier decision to expand their franchise operations. These opinions weakened when franchisees contemplating expansion of their operations were asked for their current and anticipated future opinions of franchisor value. Overall, franchisees were undecided when asked about their perceptions of current franchisor value and anticipated future franchisor value. Implications of these findings for theory and practice of franchising are discussed.
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