The choice of contract duration in franchising networks: A transaction cost and resource-based view

Gorovaia, Nina; Windsperger, Josef

doi:10.1016/j.indmarman.2018.03.002

Cited by 29 publications

(27 citation statements)

References 76 publications

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“…In addition to the model of franchising, royalty fee type, contract duration of franchise agreement/relationship is also an important attribute of the franchising. Key determinants of the franchise contract durations are a) transaction-specific investments; b) environmental uncertainty; c) strategic value creation available through knowledge leverage; d) intangible knowledge-based resources; e) intangible system-specific knowhow; f) brand name [43].…”

Section: Literature Reviewmentioning

confidence: 99%

Exclusive Brand Outlet Expansion Framework for Lifestyle Brands in India (EBOE-LS)

Ganesha

Aithal

2020

SSRN Journal

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Though EBOs' (Exclusive Brand Outlet) risk-mitigation is a collective responsibility of lifestyle brand and the expansion partner (franchisee), a majority of lifestyle brands in India believe that the risk of capital investment/recurring expenses of EBOs and profit generated by EBOs has to be owned by the expansion partner. This belief and unbalanced business strategy of lifestyle brands though attract franchisees in the early stages of EBO expansion due to the brand's reputation in the market or initial lucrative contract terms, it seriously fails to bring any longterm strategic and competitive advantages to the lifestyle brand as the drop-out rate of expansion partners increase significantly after one year of operation. This belief is also distracting lifestyle brands from understanding the long-term positive impact of EBO expansion frameworks that could balance the risk-mitigation and profits between the brand and the expansion partner. A single theory, model and framework of 'Firm-Contracts' and 'Distribution Systems' from the existing literature available across perspectives, paradigms, and areas of study (Economics, Business Law, Market Penetration, Business Strategy, Marketing and so on) is not entirely applicable that could be adopted to suit lifestyle brand's EBO expansion plan in India and designing a framework without empirical pieces of evidence is also not appropriate. In this study, i) we have studied existing theories, models and frameworks relevant to market penetration and expansion; ii) analyzed 24 months' of actual EBO data of a few select organized lifestyle brands in India across their existing expansion models; iii) borrowed experimental findings and insights from previous studies relevant in this context, to identify key decision and investment-making areas that could result in a balanced business contract between a lifestyle brand and the expansion partner thereby designing an economical/effective framework that would be useful in deployment of appropriate tactics of deciding a right EBO type for every City Type and the Store Location by a lifestyle brand in India. The framework is named as EBOE-LS.

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Section: Literature Reviewmentioning

confidence: 99%

Exclusive Brand Outlet Expansion Framework for Lifestyle Brands in India (EBOE-LS)

Ganesha

Aithal

2020

SSRN Journal

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“…Such exchanges involve the transfer of knowledge and the use of brands from the franchisor. In this way, contracts with longer durations can be beneficial because they allow more time to build value in the face of such operational elements (Gorovaia and Windersperger, 2018;Vargo and Lusch, 2016). The transaction costs theory (TCT) applies to franchise chains, as it is dedicated to understanding the relevance of contracts.…”

Section: Literature Review 21 Transaction Costs Theorymentioning

confidence: 99%

“…The transaction costs theory (TCT) applies to franchise chains, as it is dedicated to understanding the relevance of contracts. The contractual instrument can be approached as a rational organization of the franchise chain, generating greater control of its operations (Gorovaia and Windersperger, 2018;Williamson, 1985;Argyres and Mayer, 2007).…”

Section: Literature Review 21 Transaction Costs Theorymentioning

confidence: 99%

Does origin matter? The impact of the institutional environment of the origin country on the internationalization of franchise chains

Lanfranchi

Strehlau

Borini

et al. 2020

MBR

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Purpose The purpose of this research is to identify the impacts of the country of origin of a franchise chain on its commitment in the destination countries, verifying the institutional particularities between the chains from emerging and developed countries. Design/methodology/approach The research is descriptive and quantitative and involved 724 franchise chains from 10 countries of origin (Brazil, Russia, India, South Africa, Argentina, USA, Germany, Australia, Spain and Portugal), spread over 174 destination countries, totaling 3,513 cases. Findings The results indicate that institutional preferences do not vary according to the country of origin of the franchise chain but rather vary according to the destination country. Research limitations/implications This paper contributes to institutional theory by identifying a set of characteristics that explains the selection of international markets and the commitment of franchise chains. Practical implications The results obtained in the study can help managers of franchise chains to make decisions related to the selection of destination countries for international expansion based on the institutional characteristics of the markets and their compatibility with the objectives of the franchise chains. Originality/value Companies in emerging countries internationalize according to different management logics from those of companies from developed countries. Thus, it is possible that the process of selecting countries for internationalization is also based on different criteria that reflect different institutional preferences. The thesis defended in the paper is that market potential is more important to franchisees from emerging markets, whereas contract enforcement is more important to franchisees from developed markets.

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“…In the industrial marketing domain, channel governance ( Paswan, Guzmán, & Blankson, 2012 ) and, more specifically, governance in a franchising context ( Gorovaia & Windsperger, 2018 ) have emerged as important research topics. Decades earlier, an opinion piece in the second volume of Industrial Marketing Management (IMM) entitled “Franchising the ultimate in industrial marketing?” highlighted the importance of franchising by arguing it is a unique form of distribution, if not its most effective form ( Rothenburg, 1973 ).…”

Section: Introductionmentioning

confidence: 99%

Expanding the conceptual domain of governance in franchising

Ludvigsson-Wallette

Lawrence

2020

Industrial Marketing Management

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We propose a model that expands the conceptualization of governance in franchising that acknowledges traditionally ignored stakeholders, including debt and equity holders. Though research has examined how equity holders benefit from the organizational form of franchising, it has not examined the specific role that equity or debt holders play in governing franchise organizations. Additionally, the unique ontology of franchising, which includes semi-internal members of the organization (i.e., franchisees) that invest their own assets and maintain their own balance sheets, provides a rich context for exploring such governance issues. Franchisees exist outside traditional firm boundaries and are not employees, but they are closely linked to the brand given their significant investments in firm-specific assets. Franchisee-based organizations also are growing their own corporate structures and investments in firm-specific assets, sometimes dwarfing those of their franchisor partners. By expanding the concept of governance in franchising, we open avenues for significant scholarship that can enrich both the governance and franchising literatures. We provide several preliminary propositions and constructs to help encourage new research in this emerging arena of franchising research.

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The choice of contract duration in franchising networks: A transaction cost and resource-based view

Cited by 29 publications

References 76 publications

Exclusive Brand Outlet Expansion Framework for Lifestyle Brands in India (EBOE-LS)

Exclusive Brand Outlet Expansion Framework for Lifestyle Brands in India (EBOE-LS)

Does origin matter? The impact of the institutional environment of the origin country on the internationalization of franchise chains

Expanding the conceptual domain of governance in franchising

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