Predicting Multiple Unit Franchising

Abstract

Abstract This paper examines the current status of multiple unit franchising in Australia. A review of previous research in the United States highlights some characteristics that may be unique to the Australian setting such as the age and size of franchise systems, the “hands on” involvement and experience of existing franchisees, monitoring cost effects, the use of franchisor performance evaluation and reward techniques, and the governance structure of franchise systems. Consideration has been given to both academic and trade literature in developing a set of propositions that predict the likely adoption of multiple unit franchising strategies within the Australian context. These propositions explain multiple unit franchising in terms of the franchisor (growth, firm characteristics, contiguity, strategy, agency cost effects and corporate structure), the franchisee (experience and involvement at the store level), and the franchisor/franchisee relationship (intrafirm conflict). Both the model and propositions will be empirically tested in the near future.

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