Executive summary of “Franchisees’ perceptions of relationship development in franchise partnerships”

Citation

(2014), "Executive summary of “Franchisees’ perceptions of relationship development in franchise partnerships”", Journal of Services Marketing, Vol. 28 No. 6. https://doi.org/10.1108/JSM-07-2014-0261

Executive summary of “Franchisees’ perceptions of relationship development in franchise partnerships”

Article Type: Executive summary and implications for managers and executives From: Journal of Services Marketing, Volume 28, Issue 6

This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present.

While many international franchisors have gone beyond any “one size fits all” mindset the industry might once have had, and are mature enough to facilitate differences – including cultural and geographic – in their franchisees’ offerings, one of the most important challenges for the relationship remains the management of tension that stems from the franchisors’ goal of achieving uniformity across the system, on the one hand, and the franchisees’ desire for autonomy and “non-standard” ways of doing business, on the other.

Indeed, franchisors’ reluctance to understand and adapt to cultural differences could act as a major barrier in relationship development with franchisees. In contrast, their willingness to learn about the local market conditions and adapt business practices accordingly is likely to ease the relationship development. Both franchisors and franchisees enter into partnerships because they are regarded as low-risk/high-return relationships for both parties. However, it is important to note that the self-interest of each party can only be protected through effective operation of the franchise system.

Failure of the system to deliver economic value could result in negative financial and reputational outcomes both for parties. Communication and knowledge transfer facilitate learning between franchisors and franchisees. Through learning, both parties assess each other’s contributions to the partnership and undertake well-informed risk benefit analyses for their relational exchange.

Important as the relationships are, it is not yet known what triggers and hinders relationship development in “international” franchise partnerships or in franchise partnerships in different country markets. Role performance (brand reputation, marketing, training and assistance) contributes to relationship development between franchisors and franchisees. However, to develop a convincing relationship that is more robust and collaborative, franchisors need to ensure that their role performance is culturally sensitive. A franchisor’s sincerity and intention to understand and respond to cultural differences is perceived by franchisees as strong evidence of good intentions and commitment to the partnership and this contributes to relationship development. In particular, the adaptation of the product and promotion to the local market conditions is perceived as a strong sign of this commitment and, thus, acts as an important contributor to the relationship development.

In “Franchisees’ perceptions of relationship development in franchise partnerships”, Dr. Levent Altinay et al. evaluate the antecedents of franchise relationship development from the perspective of a sample of Chinese (Macau) and Turkish franchisees. In the case of both Turkish and Chinese franchisees, franchisors’ willingness to offer flexibility to them to introduce new products and services that would fit into the local market conditions was perceived as a strong sign of franchisors’ commitment and an antecedent of trust and relationship development.

One of the Turkish franchisees highlighted the importance of an international franchisor’s culturally sensitive role performance in its willingness to adapt the products and services for a business relationship to flourish, saying:

Turkish taste is very different than the Western taste. Therefore besides the standard products, I should be able to sell the food which is appealing to Turkish customers and I have been given that flexibility.

In the case of Chinese franchisees only, it was found that, in addition to products and services, cultural sensitivity in role performance needs to be demonstrated in the marketing support offered to the franchisees. In this regard, they highlighted the importance of the adaptation of the franchise brand to the Chinese context. One said:

It is difficult for Chinese customers to pronounce and remember some of the Western brands. Therefore, besides adapting the products and services to the tastes of Chinese customers, companies need to develop Chinese versions of their brands.

In the study, brand reputation was mentioned by franchisees as a main antecedent of relationship development. This was well-captured in one of the statements of a Chinese franchisee who emphasized the importance of the brand in relationship development, saying:

We trust the power of the system (brand). There are over ninety stores in Hong Kong, so it must be mature. Because this system is perfect and many stores are operating well, you trust him and start to build a closer relationship.

One Turkish franchisee said: “Brand reputation represents the strength of the infrastructure of the franchise partner and consistency in standards”. Brand reputation is seen as the “insurance” of the existing system, representing the quality of products and services as perceived by consumers and other franchisees. In terms of Turkish franchisees, however, brand reputation is also determined by the extent of the franchisor’s commitment to the partnership and willingness to support the franchisee’s integration into the franchise system.

Respondents also emphasized the importance of communication in understanding each other’s needs to fulfill their partnership obligations, and so establishing a strong foundation for the relationship. Mutual communication between the partners appears to be particularly important for relationship development in countries where franchising is not a well-established business format.

To read the full article enter 10.1108/JSM-09-2013-0240 into your search engine.

(A preícis of the article “Franchisees’ perceptions of relationship development in franchise partnerships”. Supplied by Marketing Consultants for Emerald.)