Standardization and adaptation in business format franchising

Kaufmann, Patrick J.; Eroğlu, Sevgin

doi:10.1016/s0883-9026(97)00097-9

Cited by 262 publications

(353 citation statements)

References 23 publications

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“…If economies of scale and scope are important, homogeneity could appear at the corporate ownership level. On the other hand, the franchising literature has pointed out that the value of a chain's brand name comes from its consistency across outlets (Kaufmann and Eroglu 1999). If consistency in shopping experiences across stores within a same chain matters, stores belonging to the same chain banner could show stronger homogenization of assortments.…”

Section: Company Factorsmentioning

confidence: 99%

An Empirical Analysis of Assortment Similarities Across U.S. Supermarkets

2010

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An empirical analysis of assortment similarities across U.S. supermarketsHwang, M.; Bronnenberg, Bart; Thomadsen, R. General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.-Users may download and print one copy of any publication from the public portal for the purpose of private study or research -You may not further distribute the material or use it for any profit-making activity or commercial gain -You may freely distribute the URL identifying the publication in the public portal Take down policyIf you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. T his paper examines pairwise assortment similarities at U.S. supermarkets to understand how assortment composition and size are related to underlying factors that describe local store clientele, local competitive structure, and the retail outlets' characteristics. The top-selling items, which cumulatively make up 50% of sales, are sold at nearly every store, but other items are viewed as optional. We find that, within states, supermarkets owned by the same chain carry similar assortments and that the composition of their clientele and the presence of competing stores have effects on assortment similarity that are an order of magnitude smaller than ownership structure. In contrast, we find that, across states, supermarkets owned by the same chain do version their assortment. We explain this difference using extant work on the minimal efficient scale of supermarkets and on local demand effects. Furthermore, we investigate the distribution and role of regional brands. We find that regional brands are primarily distributed by small regional chains or independent stores. "Value" regional brands are primarily distributed by supermarket firms without store brands, whereas the distribution of "premium" regional brands is unrelated to the presence of store brands. We discuss our findings in the context of modeling assortment decisions and manufacturers designing distribution policies.

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Section: Company Factorsmentioning

confidence: 99%

An Empirical Analysis of Assortment Similarities Across U.S. Supermarkets

2010

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“…For these reasons, franchisors provide entrepreneurial autonomy in certain fields where there may be potential advantages from adapting to the environment. These are the peripheral aspects of the business (Kaufmann and Eroglu 1999) that do not compromise the homogeneity of the brand, but may ultimately enhance franchisees' local adaptive capacity (Winter et al 2012) and their motivation by meeting their entrepreneur's desire for autonomy (Dant and Gundlach 1999). Moreover, as franchisees contribute to growth, franchisors tend to recruit prospects that are likely to behave more like entrepreneurs than investors (Zachary et al 2011).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…In summary, incompleteness and delegation of decision rights favor innovation and adaptation but at the risk of damaging image consistency (Kaufmann and Eroglu 1999) and performance (Szulanski and Jensen 2008) and increasing monitoring costs. So, delegation creates a trade-off between Bloss of control^for the franchisor and a positive Bincentive effect^for franchisees, and this has opposing effects on residual income.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…Moreover, experienced franchisees may have a better understanding (compared to inexperienced ones) of the operation of the business and their local markets, which increases their impulse to respond to the idiosyncratic needs of their customers and, consequently, their temptation to forego business standards (Kaufmann and Eroglu 1999). The net effect of franchisees' prior experience will reflect both positive and negative influences of previous experience on conflict.…”

Section: Investment Obligations: Upfront Investments and Training Promentioning

confidence: 99%

“…Specifically, franchising facilitates jump-start entrepreneurial activities by providing SMEs with competitive awareness and appropriate knowledge (Paswan and Rajamma 2016) and may even facilitate economic development in their regions (Michael 2014). On the other hand, franchisors benefit from the franchisees' management capabilities and specific local know-how in the running of their outlets (Kaufmann and Eroglu 1999;Sorenson and Sørensen 2001) that helps them to overcome entrepreneurial capacity shortages (Norton 1988).…”

Section: Introductionmentioning

confidence: 99%

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Antecedents of early terminations in franchising: franchisor versus franchisee cancelations

López-Fernández

López‐Bayón

2017

Small Bus Econ

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Franchisors capitalize on franchisee entrepreneurial capacity to grow. However, enabling franchisees to develop their ventures may damage system consistency. This dilemma makes conflict particularly prevalent in the field of franchising. Nevertheless, prior research has reported an incomplete picture of factors leading to serious disagreement and premature termination in franchise partnerships. We address this gap, first, by adding the entrepreneurial autonomy of franchisees as a relevant but underexplored source of conflict and, second, by providing a more fine-grained analysis of franchisors' versus franchisees' drivers of termination. Specifically, we focus on the controversial issues of pricing and local advertising policies and analyze how expanding franchisees' entrepreneurial autonomy in these decision areas is related to contract terminations depending on who ended the relationship (the franchisor or a franchisee). The study also highlights less controversial requirements and conditions (e.g., upfront investments, franchisor experience …) that may reduce early terminations. Our empirical objectives are met by using survey data from a sample of franchisor companies. The results show how the performance outcomes of entrepreneurial autonomy differ depending on the decision area in which it is exercised. Results also throw light on the consequences of various critical franchise policies that may be masked if both types of termination (franchisors vs. franchisees) are considered together.

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2020

Location‐based Marketing

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Standardization and adaptation in business format franchising

Cited by 262 publications

References 23 publications

An Empirical Analysis of Assortment Similarities Across U.S. Supermarkets

An Empirical Analysis of Assortment Similarities Across U.S. Supermarkets

Antecedents of early terminations in franchising: franchisor versus franchisee cancelations

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