Organisational form and quality, service, and cleanliness inspection scores in restaurant franchise chains: Evidence from Spain

Abstract

This study investigates how the organisational form (company ownership vs. franchising) of individual restaurants of a large Spanish restaurant company influences their inspection scores in terms of quality, service, and cleanliness (QSC). The research uses a panel data set that includes bimonthly restaurant‐level data on QSC inspection scores. The aggregate data initially reveal substantial differences between company‐owned and franchised restaurants. Nevertheless, after controlling for other variables, we observe that such differences are in fact minor, or even nonexistent. In addition, when we endogenise the selection of the restaurants' organisational form, the differences become statistically insignificant.

Organisational form and performance in fashion retailing

“…In turn, Kalnins and Mayer (2004) have also observed similar failure rates for franchised and vertically integrated establishments. Furthermore, recent investigations have not observed any significant performance differentials between vertically integrated and franchised outlets (Kosová et al , 2013; Lawrence and Perrigot, 2015; Vázquez-Suárez et al , 2020). In short, the empirical evidence is diverse.…”

“…Franchisors can lower these performance differences by implementing control mechanisms and incentives for both franchisees and managers of vertically integrated stores. For instance, franchisors in fashion retailing can use several control devices (audits, mystery shoppers, customer surveys, management information systems) to monitor both the financial situation and the service quality provided by the chain's stores (Sánchez-Gómez et al , 2011; Vázquez-Suárez et al , 2020). Audits consist of visits to a chain's establishments by a franchisor's representatives in order to verify compliance with its standards.…”

“…At network level, scholars have analysed the synergies between franchised and company-owned outlets in the same chain (Bradach, 1997, 1998). At establishment level, researchers have examined the performance differences between franchised and company-owned outlets with mixed findings (Kosová et al , 2013; Shelton, 1967; Vázquez-Suárez et al , 2020). One of the goals of research in this field is to discover whether one of these two organisational choices outperforms the other.…”