Efficiency comparison of multiple brands within the same franchise: Data envelopment analysis approach

Roh, Eugene Y.; Kyuwan, Choi

doi:10.1016/j.ijhm.2009.06.004

Cited by 37 publications

(41 citation statements)

References 43 publications

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“…In franchise efficiency literature [2,[15][16][17][18][19][20][21], a few studies have applied non-parametric DEA to measure the franchise efficiency of an individual decision-making unit (DMU), as seen in Table 1. The DEA model uses all observed franchising networks to assess the relative efficiency of each observed chain, comparing its productive results to those of all the sample chains.…”

Section: Literature Review Of Franchise Efficiencymentioning

confidence: 99%

“…The results of study demonstrated that plural form networks are, on average, more efficient than strictly franchised and wholly owned chains. In a similar perspective, Roh and Choi [17] empirically compare and contrast the efficiency of multiple brands within the same franchise in the Pacific Rim utilizing DEA methodology. In addition, Martin et al [18] measured the super-efficiency of 143 franchises in the trade and other services sector in Spain and characterized the best companies, confirming the relationship between efficiency and profit.…”

Section: Literature Review Of Franchise Efficiencymentioning

confidence: 99%

“…That is, the franchisor owns the brand, the brand's trademarks, and sets the terms for licensing a franchisee to use the brand's name and its trademarks. The franchisee operates a business under the franchise's brand [17,18,20]. In this study, we investigated the efficiency of coffee shop franchisors that have a franchising arrangement with a number of franchisees in Korea.…”

Section: Research Model and Datamentioning

confidence: 99%

“…Additionally, this study used the MaxDEA 6.9 (maxdea.com) and STATA 14 software packages to measure the metafrontier DEA estimations and second-stage truncated bootstrapped regression suggested by Simar and Wilson [13,14]. In general, most coffee shop franchisors strive to trigger a franchisee's sales volumes through the franchisor's continuous management control of the franchisee, ultimately promoting the franchisor's total sales and maintaining the franchisor's sustainable growth [17][18][19][20]27,28]. Thus, this study used output-oriented DEA to estimate and compare the contemporaneous efficiency score of Korean coffee shop franchisors from 2015 to 2018.…”

Section: Research Model and Datamentioning

confidence: 99%

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Measuring the Meta Efficiency and Its Determinants on Efficiency in the Korean Coffee Shop Franchise

2020

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Previous applications of DEA (data envelopment analysis) models in the field of franchising have been scarce. In particular, measurement and analysis of the operational efficiency of coffee shop franchisors in the explosively growing coffee market in Korea is required. In this study, we categorize 29 Korean coffee shop franchisors into three groups according to their number of franchisees and employ the metafrontier analysis to measure the efficiency of coffee shop franchisors from 2015 to 2018. Based on the results of metafrontier DEA, this study identifies sources of inefficiency within individual coffee shop franchisors to provide insights for coffee franchise operators and investigates efficiency differences between small-chain and medium-chain coffee shop franchisors. Furthermore, the results of bootstrapped truncated regression provide that the external environmental factors affecting the efficiency of each individual group are totally different patterns depending on the franchise group. Based on the analysis results, this study suggests strategic initiatives tailored to individual coffee shop groups to enhance their operating efficiency and identifies the principal operational drivers of the environmental variables to achieve sustainable growth.Additionally, analyze the impact of the industry in which the franchisor operates its business on its chain efficiency by comparing 43 chains' efficiency between and across industries (retail versus services) using a meta-DEA and a context-dependent DEA. In this study, they developed a level-by-level benchmarking path with the context-dependent DEA approach to provide realistic short-term and long-term objectives to inefficient chains. Methodology Analysis Technique (1): Metafrontier DEA ModelTraditional DEA models consider the units selected for analysis as a homogenous group, thus, it is supposed that all the considered DMUs use the same technology and are completely homogenous organizations [18]. Comparisons of technological efficiencies among groups cannot be performed using conventional DEA because the technical efficiency of a particular company is difficult to compare with that of others operating with other technologies [9,10]. However, franchising activity includes numerous and diverse sectors and groups, such as travel agencies, hotels, restaurants, and fashion outlets. This fact makes us to suppose that there can be differences between the efficiency of franchise firms depending on their belonging sector or their franchise group managed by individual franchisors [18]. To account for this heterogeneity problem, there are several approaches that take account of different production technologies. In particular, Battese et al. [7], Battese and Rao [22], and O'Donnell et al. [23] consider the fact that technology could differ across regions and develop the stochastic metafrontier approach. A metafrontier approach is able to measure efficiencies of DMUs associated with distinctive and heterogeneous technologies. This involves a metafrontier estimation, which...

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Section: Literature Review Of Franchise Efficiencymentioning

confidence: 99%

Section: Literature Review Of Franchise Efficiencymentioning

confidence: 99%

Section: Research Model and Datamentioning

confidence: 99%

Section: Research Model and Datamentioning

confidence: 99%

See 2 more Smart Citations

Measuring the Meta Efficiency and Its Determinants on Efficiency in the Korean Coffee Shop Franchise

2020

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“…A review of the literature contains many examples of studies of franchise efficiency using DEA methodology. For instance, Roh and Choi (2010) develop a study of efficiency between multiple brands in a restaurant franchising chain operating in the Pacific Rim; Pulina, Detotto, and Paba (2010) analyse the relationship between size and efficiency in the Italian hospitality sector using a DEA approach; Chen (2009) uses a DEA model with slacks for studying Taiwanese hotel chain efficiency; Alonso de Magdaleno, Fernández Barcala, and González Díaz (2009) analyse whether the contractual forms of hotel chains influence efficiency, focusing on the Melia Hotel case; Giménez, Martínez, and Buffac (2007) use a three-step DEA to reallocate resources in restaurant locations belonging to a Spanish fast-food chain; Hwang and Chang (2003) also evaluate the efficiency of the hotel management of a hotel chain in Taiwan; Tsaur (2000) measures the relative efficiency of international tourist hotels in Taiwan; Anderson, Fok, and Scott (2000) focus on hotel efficiency analysis with DEA models and use another stochastic frontier technique to analyse 48 hotels in the USA.…”

Section: Introductionmentioning

confidence: 99%

Efficiency analysis of small franchise enterprises through a DEA metafrontier model

Bartual

Garcia-Martin

Sala-Garrido

2012

The Service Industries Journal

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Spain has over 1000 franchises with more than 65,700 establishments in a wide range of economic sectors and a global turnover of over E19,000 million (2011). These figures confirm the importance of franchises in the Spanish economy. Consequently, an understanding of the economic and technical efficiency of franchises can help managers to optimise resources and take correct decisions. Traditional efficiency models require that the units being assessed operate with the same technology. As franchises reach many different sectors (travel agencies, catering companies, fashion firms, etc.) their relative efficiency is analysed using a non-concave metafrontier approach, which is based on data envelopment analysis. This methodology enables a comparison between different groups and takes into account any heterogeneity between the franchise firms of several sectors.

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Restaurant franchising and top management team

2016

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Efficiency comparison of multiple brands within the same franchise: Data envelopment analysis approach

Cited by 37 publications

References 43 publications

Measuring the Meta Efficiency and Its Determinants on Efficiency in the Korean Coffee Shop Franchise

Measuring the Meta Efficiency and Its Determinants on Efficiency in the Korean Coffee Shop Franchise

Efficiency analysis of small franchise enterprises through a DEA metafrontier model

Restaurant franchising and top management team

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