A Model of Influential Factors in Franchise Operations

Aguiar, Helder de Souza; Luppe, Marcos Roberto; Nascimento, Paulo Tromboni de Souza

doi:10.15728/bbr.2021.18.1.3

Cited by 1 publication

(9 citation statements)

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“…However, drawing consistency with the literature, the extent of success of a franchise system largely depends on the coordination, regularity in communication and risk sharing of the contracting parties (Ceric, 2012; Watson and Johnson, 2010; Navarro and Puig, 2017; Bergh et al. , 2019; Jang and Park, 2019; Aguiar et al. , 2021).…”

Section: Discussionmentioning

confidence: 74%

“…Managers then have either of the options for responding to risk, either avoid, mitigate or transfer (Hajdini and Windsperger, 2019;Balsirani et al, 2020). Over the years, researchers have been suggesting strategies for addressing the issue, such as promises of future work if the effort is high, signing detailed contract and warranties, monitoring intensity, penalties and bonuses, creating an incentive structure that makes the long-term gains from strong efforts and cooperative behaviour exceed the short-term payoff from opportunism and poor efforts and establishing trust and coordination (Wathne and Heide, 2000;Joslin and Muller, 2016;Elango, 2019;Aguiar et al, 2021).…”

Section: Franchising Electricity Distribution Companiesmentioning

confidence: 99%

“…Adverse selection is defined as principals misjudging agents because the information about agents' skills and competencies is "hidden" and agents may misrepresent their abilities and motivations (Eisenhardt, 1989). Studies have stated that choosing franchisees in a systematic manner might lead to admirable consequences, while bad choices of agents lead to future problems for the franchisor (Aguiar et al, 2021). Thus, researchers have suggested that for building and maintaining a higher-quality network, a proper selection method could help in identifying potential franchisees (Hajdini and Windsperger, 2019;Sawant et al, 2020).…”

Section: Franchising Electricity Distribution Companiesmentioning

confidence: 99%

“…Adverse selection is defined as principals misjudging agents because the information about agents' skills and competencies is “hidden” and agents may misrepresent their abilities and motivations (Eisenhardt, 1989). Studies have stated that choosing franchisees in a systematic manner might lead to admirable consequences, while bad choices of agents lead to future problems for the franchisor (Aguiar et al. , 2021).…”

Section: Agency Relationship In Power Distribution – Theoretical Fram...mentioning

confidence: 99%

“…Franchising as a business model has been defined as "a business form essentially consisting of an organization (the franchisor) with a market-tested business package centred on a product or service, entering into a continuing contractual relationship with franchisees, typically self-financed and independently owner-managed small firms, operating under the franchisor's trade name to produce and/or market goods or services according to a format specified by the franchisor" (Elango, 2019). The 21st century exhibited that franchising is a feasible product or distribution option in numerous segments (Aguiar et al, 2021). Franchise systems have a parent franchisor organization (discom) and numerous entrepreneurs (franchisee) operating their enterprises as franchisees.…”

Section: Introductionmentioning

confidence: 99%

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Agency issues in franchising electricity distribution companies: inter-organizational and multi-level study

Das

2022

JEAS

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PurposeManagement of power distribution companies (discoms) in India has been historically criticized on the ground of inefficient management. Inefficiency in operations triggered management by private franchisees for promotion of managerial and technical expertise. However, franchise contracts have achieved mixed outcomes despite the business model being a decade old in the Indian power distribution sector. Therefore, this study sheds light on the drivers of discoms (principal) with the franchisees (agent) for the achievement of the common performance goals, highlighting the agency issues at multiple levels across the organizational hierarchies. The study seeks to acknowledge the commonalities and differences between and across varying levels.Design/methodology/approachA qualitative embedded single case study was conducted in an Indian state, namely Odisha. The study was built on archival analysis, personal observations and semi-structured interviews with the franchisors and franchisee officials across the organization's hierarchical levels. A conceptual model based on the review of prior literature formed the set of coding and presentation for the study.FindingsThe study provides insights on factors that play a role in effective power distribution management, operational efficiency and improved financial performance through the partnership of the principal and the agent.Research limitations/implicationsThe study is predominantly dependent upon interviews. This paved the way for the limitation of human biases. Additionally, deep insights were drawn from a single case study of a discom's decision to hire franchisees. However, this was at the cost of the number of organizations interviewed. The findings of the study could be built across other areas or nations.Originality/valueThere is adequate literature on franchising as a business model. However, literature is lacking in highlighting the commonalities and differences between different contracting parties and their impact on the performance of the contract. Additionally, there is a dearth of literature on franchising in the power distribution sector. Therefore, studying the model from multiple perspectives would contribute to the literature on the power sector and franchising.

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