Efficiency analysis of small franchise enterprises through a DEA metafrontier model

Abstract

Spain has over 1000 franchises with more than 65,700 establishments in a wide range of economic sectors and a global turnover of over €19,000 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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