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Mature franchise systems use multiple unit franchising to leverage learning economies and sustain systemwide growth

Scott Weaven (Department of Marketing, Service Industry Research Centre, Griffith University, Queensland, Australia)
Lorelle Frazer (Learning and Teaching, Service Industry Research Centre, Griffith University, Queensland, Australia)

Asia Pacific Journal of Marketing and Logistics

ISSN: 1355-5855

Article publication date: 3 April 2007

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Abstract

Purpose

This paper aims to extend current understanding of organisational choice theory through examining to what extent firm‐level factors influence the growth of franchisee‐owned mini‐chains within Australian franchise systems. In particular, this study examines how the age of the system, corporatisation of management processes, plurality of distribution, levels of intra‐firm conflict and franchise system complexity influence multiple unit franchising adoption.

Design/methodology/approach

A qualitative methodology was adopted to gain a clearer picture of the salient issues influencing multiple unit franchising adoption from the franchisor's perspective.

Findings

The research reveals that mature franchise systems in Australia use sequential methods of multiple unit franchising expansion in order to minimise adverse selection costs and leverage learning economies derived from previous experiences in managing intra‐firm channel relationships.

Research limitations/implications

Industry‐specific influences and differences in managerial orientations may limit the predictive application of this study to all franchise systems. However, on balance the reflections offered by the participants provide a rich and valuable source of information about the factors influencing their willingness to encourage this growth strategy.

Practical implications

Franchisors need to consider upfront whether they are ready and able to encourage multiple unit ownership within their systems. Less experienced franchisors may need to corporatise operations, minimise channel conflict and introduce administrative support procedures to ensure the recruitment of suitable franchisee candidates who will assist in realising the franchisor's goals, thus promoting a harmonious franchising relationship.

Originality/value

Whereas, previous research has investigated motivations for encouraging multiple unit franchising, this paper supplements that literature by examining multiple unit franchising within Australia.

Keywords

Citation

Weaven, S. and Frazer, L. (2007), "Mature franchise systems use multiple unit franchising to leverage learning economies and sustain systemwide growth", Asia Pacific Journal of Marketing and Logistics, Vol. 19 No. 2, pp. 107-126. https://doi.org/10.1108/13555850710738471

Publisher

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Emerald Group Publishing Limited

Copyright © 2007, Emerald Group Publishing Limited

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