Brand and performance signals in the choice of franchise opportunities

Monge, María Esther Calderón; Huerta-Zavala, Pilar

doi:10.1080/02642069.2014.905920

Cited by 13 publications

(10 citation statements)

References 46 publications

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“…This study uses independent variables commonly used in the franchise literature (Alon, 2001; Castrogiovanni et al, 2006a; Shane, 1998). For the variable recognition of the brand, we have used four indicators: (a) the experience, which is measured with the age of the franchise (Elango, 2007; Maruyama & Yamashita, 2012) using the natural logarithm of the years of operation as franchise until 2016; (b) the size of the franchise (Calderon‐Monge & Huerta‐Zavala, 2014; Maruyama & Yamashita, 2012; Perrigot et al, 2013) measured as the natural logarithm of the total units of the chain; (c) MFA affiliation, coded with 1 “one” if the franchise belonged to MFA and with 0 “zero” if it did not belong. The origin variable, which represents the nationality of the franchise, was controlled by coding with 1 “one” if it was of foreign origin and 0 “zero” if it was of national origin.…”

Section: Methodsmentioning

confidence: 99%

“…The intensive use of franchising is a key factor for the new franchisors to grow and survive, since the resources that the franchisees contribute are important for the survival and success of the chain (Shane, 1996b). Building a brand is a task that requires time and large investments (Calderon‐Monge & Huerta‐Zavala, 2014). The signal theory predicts that the franchise system will begin by opening a critical mass of the company's owned units to establish the credibility of its system, and once the brand has been established and recognized, the company will invest in the development of franchised units (Baker & Dant, 2008).…”

Section: Research Hypothesismentioning

confidence: 99%

“…Therefore, a more experienced franchise system has a more recognized brand and increases the possibility of attracting new franchisees (Dant & Kaufmann, 2003; Perrigot, López‐Fernández, & Eroglu, 2013). A credible signal to invest in the business concept for the future franchisee and that improves the guarantee of success of their investment, is related to the survival and experience of the franchisor (Calderon‐Monge & Huerta‐Zavala, 2014; Gonzalez‐Diaz & Solis‐Rodriguez, 2012). Hypothesis Franchising experience positively influences franchising intensity.…”

Section: Research Hypothesismentioning

confidence: 99%

“…In a competitive market, the information provided by the units in operation will be more likely to be taken as relevant data by future franchisees (Michael, 2009). Brand recognition reflects the size of the chain and greater recognition increases the likelihood of attracting new franchisees (Calderon‐Monge & Huerta‐Zavala, 2014; Perrigot et al, 2013). Hypothesis Franchise size positively influences franchising intensity .…”

Section: Research Hypothesismentioning

confidence: 99%

“…The initial investment, the entry fee, and royalties are part of the pricing strategy followed by a franchisor. For Shane (1996a), an agency problem is the franchisee's opportunism that can be reduced through a high initial investment since the risk of losing his investment due to the cancellation of the contract inhibits opportunistic behavior and also contributes to reduce the inverse selection of the franchisee (Calderon‐Monge & Huerta‐Zavala, 2014; Sánchez, Suárez, & Vázquez, 2008). On the other hand, franchisors with a high value of intangible resources, such as brand value and know‐how, will require a high initial investment to protect their brand by reducing the offerings of potential new investors.…”

Section: Pricing Strategymentioning

confidence: 99%

See 4 more Smart Citations

The factors that determine franchising intensity: An analysis in an emerging economy

Villanueva

Ramírez

2020

Thunderbird Intl Bus Rev

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This study evaluates the franchising intensity of Mexican franchise chains. Supported by the theory of agency and the theory of signals, the influence of the brand recognition and the pricing strategy on the franchising intensity of the chain was evaluated. The brand recognition was evaluated using four indicators: experience, size, MFA (Mexican Franchise Association) affiliation, and origin. The pricing strategy was evaluated with three indicators: initial investment, entry fee, and royalties. On a sample of the 397 franchise systems operating in Mexico in 2016, the multiple linear regression technique was used to evaluate the influence of the brand recognition and the pricing strategy of the chain on the franchising intensity of the chain. This research confirms that the factors associated with brand recognition and initial investment influence the franchising intensity of the Mexican chains.

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Section: Methodsmentioning

confidence: 99%

Section: Research Hypothesismentioning

confidence: 99%

Section: Research Hypothesismentioning

confidence: 99%

Section: Research Hypothesismentioning

confidence: 99%

Section: Pricing Strategymentioning

confidence: 99%

See 3 more Smart Citations

The factors that determine franchising intensity: An analysis in an emerging economy

Villanueva

Ramírez

2020

Thunderbird Intl Bus Rev

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Quality signaling through ex-ante voluntary information disclosure in entrepreneurial networks: evidence from franchising

Sadeh

Kacker

2017

Small Bus Econ

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This paper examines antecedents of ex-ante voluntary information disclosures for standardized contracts in entrepreneurial networks. Entrepreneurs (e.g., franchisors) may make such disclosures to prospective business partners in order to signal profitability of partnering, attract financial and managerial resources and develop their entrepreneurial networks. In practice, only a fraction of franchisors make financial performance representations (FPR), an ex-ante voluntary information disclosure to prospective franchisees. We address gaps in the signaling, voluntary information disclosure, franchising, entrepreneurship and small and medium enterprises (SME) literatures. We draw on signaling theory to develop a theoretical framework and investigate factors that influence a franchisor's disclosure decision. We evaluate hypotheses from our theoretical framework through econometric analyses of multi-sector panel data for the U.S. franchising industry. We estimate a logit model and use lagged independent variables to address our dichotomous independent variable and potential endogeneity respectively. Our results support the view that firms signal their quality through FPRs to attract potential business partners and expand their entrepreneurial networks. Beyond the extant literature, we find that a rigorous partner qualification mechanism is another driver of voluntary information disclosure in franchising. Our findings also provide empirical support for the complementary role played by multiple quality signaling mechanisms used by franchisors and yield public policy implications for franchising.

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Contingent effects of firm and employee reputations on professional advice adoption

Kang

Lam

2016

Serv Bus

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Applying resource-based theory and signaling theory, we argue that firm and employee reputations affect consumer adoption of advice offered by professional service providers, and these effects are contingent on contextual variables. Our study on brokerage reports in Singapore supports our arguments. We show that reliance on firm (employee) reputation when adopting advice is higher (lower) if the evaluation of an entity is an initial rather than a repeated one. Also, reliance on employee reputation increases with stronger recommendation or when the entity has a business relationship with the advice-giving firm. These findings have implications for advice-giving firms and policy makers.

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Brand and performance signals in the choice of franchise opportunities

Cited by 13 publications

References 46 publications

The factors that determine franchising intensity: An analysis in an emerging economy

The factors that determine franchising intensity: An analysis in an emerging economy

Quality signaling through ex-ante voluntary information disclosure in entrepreneurial networks: evidence from franchising

Contingent effects of firm and employee reputations on professional advice adoption

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