Why franchisors recruit franchisees from the ranks of their employees

Balsarini, Peter; Lambert, Claire; Ryan, Maria M.

doi:10.1080/0965254x.2020.1733053

Cited by 5 publications

(26 citation statements)

References 61 publications

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“…The internal recruiting of franchisees has long been an active practice in the franchise industry as evident from numerous trade publications (Pillon 2019;Stowe 2015;Syed and Syed 2019;Taylor 2015). To date there has only been one academic study focused on IRFs, Balsarini et al (2020) and it provides the following definition "an internally recruited franchisee is . .…”

Section: Externally Recruited Franchisees and Internally Recruited Franchiseesmentioning

confidence: 99%

“…Most often IRFs are employees with at least 10 years of service to the franchise system (Kroc and Anderson 1977) and are proven operators possessing a strong knowledge base and performance history in managing an outlet (Bradach 1997). Despite the prevalence of IRFs in franchise systems being estimated at 40%, with the balance of 60% being ERFs, only one prior study (Balsarini et al 2020) has distinguish between IRFs and ERFs. Accordingly, these two categories of franchisees warrant further investigation in their own right and provide the contexts for this research.…”

Section: Externally Recruited Franchisees and Internally Recruited Franchiseesmentioning

confidence: 99%

“…One ramification of the franchisee shortage has been further franchisee segmentation involving the identification of the two nascent categories of franchisees that provide the contexts for this research. Firstly, externally recruited franchisees (ERFs) who comprise franchisees recruited from outside the franchisor organization and secondly internally recruited franchisees (IRFs) who constitute franchisees recruited from within the franchisor organization having been employees of the franchisor (Balsarini et al 2020). The prevalence of IRFs is estimated at 40% (Bradach 1997;Lashley and Morrison 2000), yet a paucity of research on IRFs has meant they have been predominantly ignored by the literature.…”

Section: Introductionmentioning

confidence: 99%

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Subjective Knowledge, Perceived Risk, and Information Search when Purchasing a Franchise: A Comparative Exploration from Australia

Balsarini

Lambert

Ryan

et al. 2021

JRFM

Self Cite

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Franchising has long been a method by which organizations seek to expand and facilitate local market development. However, franchising as a growth strategy can often be hampered by lack of suitable franchisees. To mitigate this shortage, some franchisors have engaged in recruiting franchisees internally from the ranks of their employees in addition to the traditional approach of recruiting franchisees externally. Predominantly franchisees are individuals rather than corporations and thus purchasing a franchise should most commonly be characterized as a consumer acquisition. To explore the relationship between subjective knowledge, perceived risk, and information search behaviors when purchasing a franchise qualitative interviews were conducted with franchisees from the restaurant industry. Half of these respondents were externally recruited having never worked for the franchisor and half were internally recruited having previously been employees of the franchisor. The external recruits expressed a strong desire to own their own business and engaged in extensive decision-making processes with significant information search when purchasing their franchises. Contrastingly, the internal recruits expressed a strong desire to be their own boss and engaged in limited, bordering on habitual decision-making processes with negligible information search when acquiring their franchises. The results reveal that differences in subjective knowledge and perceived risk appear to significantly impact the extent of information search between these two groups. A model of the relationship between subjective knowledge, perceived risk and information search in the purchasing of a franchise is developed that reconciles these findings. The findings also have practical implications for franchisors’ franchisee recruiting efforts which are integral to their capacity to develop local markets.

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Section: Externally Recruited Franchisees and Internally Recruited Franchiseesmentioning

confidence: 99%

Section: Externally Recruited Franchisees and Internally Recruited Franchiseesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Subjective Knowledge, Perceived Risk, and Information Search when Purchasing a Franchise: A Comparative Exploration from Australia

Balsarini

Lambert

Ryan

et al. 2021

JRFM

Self Cite

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show abstract

“…Studies based on this theory have assumed that as it is difficult to expand for a company through internal resources, henceforth they need to look beyond for their financial, managerial and informational resources (Bitti et al , 2019; Elango, 2019; Balsirani et al , 2020). This theory is based on assumption that organizations grow, become more profitable and stabilize over time by adopting the franchising route (Elango, 2019; Balsirani et al , 2020; Legendre et al , 2021). The prediction of hiring franchisees to address lack of resources has found mixed support.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

“…This model was historically introduced for bringing in operational efficiency, generate more revenue and expand operations of an existing business to far-flung areas (Combs and Ketchen, 2004; Elango, 2019; Legendre et al , 2021). This has been argued through the resource scarcity theory (RST) (Combs et al , 2004; Balsirani et al , 2020). The authors argued the financial, managerial and information about local areas are prime resources responsible for bringing the requisite improvements in the performance of the franchisor (Oxenfledt and Kelly, 1969; Elango, 2019; Legendre et al , 2021).…”

Section: Introductionmentioning

confidence: 99%

Unveiling benefits through franchising in Indian power distribution: addressing the resources scarcity

Das

2021

JEAS

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PurposeThe Indian power distribution companies are increasingly recognizing franchising for reviving their high loss-making rural pockets. The motivation for franchising has been a reduction of the franchisor's resource scarcity by bringing in operational efficiency and improved service quality to end consumers. However, there is a dearth of evidence on the influence of the franchisee's operations in addressing the resource scarcity of franchisors in predominantly rural areas. This study contributes towards filling the research gap.Design/methodology/approachA qualitative embedded multiple case study was conducted. The cases comprised two rural franchisees operating towards attaining the common goal. The study was built on archival analysis, personal observations and semi-structured interviews with the franchisors and franchisee officials across the organization's hierarchical levels. A conceptual model based on the review of prior literature formed the initial set of coding for the study. The data were presented based on within-case and across-case analysis.FindingsThe analysis revealed that the contract design impacts the requisite operational efficiency achievement. This variation could be elaborated by factors, such as system adaptation across organizational hierarchy, autonomy and independence, review and feedback systems, monitoring, a professional's attitude, bureaucracy, adaption with the local areas, risk sharing, incentives and compensation structure.Research limitations/implicationsThe study findings could be generalized to the extent of similar socio-economic conditions, prevailing governance mechanisms and law and orders. Additionally, since the law does not mandate the regulatory commissions to scrutinize the performance of the franchisees, the study was built on data shared by the franchisees and the discom. Further, this study considered the performance of only two performing franchisees. Matching these actualities with the discoveries of this study remains a continuing project as participation of private players is increasingly being recognized. Therefore, the insights drawn from this study could be used to improve the franchise model and can be scaled up across the nation, regions and sectors.Originality/valueThere is a dearth of literature on franchising in electricity distribution. This study is one of the first studies on studying the franchise system in the electricity distribution sector through the application of a well-accepted management theory.

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Negotiation, Commercialization and Franchise Management

Pauceanu¹

2022

Innovation, Innovators and Business

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Why franchisors recruit franchisees from the ranks of their employees

Cited by 5 publications

References 61 publications

Subjective Knowledge, Perceived Risk, and Information Search when Purchasing a Franchise: A Comparative Exploration from Australia

Subjective Knowledge, Perceived Risk, and Information Search when Purchasing a Franchise: A Comparative Exploration from Australia

Unveiling benefits through franchising in Indian power distribution: addressing the resources scarcity

Negotiation, Commercialization and Franchise Management

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