The hospitality franchise purchase decision making process

Abstract

Purpose

The purpose of this study is to explore the hospitality franchise purchase decision-making process undertaken by franchisees in Macau as an emerging tourism destination and the role of national culture on purchasing a franchise brand and selecting a potential franchisor.

Design/methodology/approach

Semi-structured in-depth interviews with 18 franchisees in Macau, who purchased international and domestic hospitality franchise brands, were conducted to understand the feelings, attitudes and motivation of franchisees toward purchasing a hospitality franchise.

Findings

The study reveals that national culture can play an important role in franchisees’ decision-making process. Personal networks of friends and family (guanxi) are very influential in introducing and steering aspiring entrepreneurs toward franchising as an option to realize their ambitions, although there may be some limitations to franchisees with this approach. Guanxi was also found to be particularly relevant during negotiations and franchisees’ post-purchase reviews.

Practical implications

International franchisors should understand the importance of guanxi at different stages of the franchisees’ decision-making process. Franchisees should realize how a reliance on guanxi might negatively affect their efforts to undertake sufficient research to thoroughly evaluate the franchisor offer before contract signature.

Originality/value

A comprehensive hospitality franchisee decision-making purchase framework is developed, which includes the cultural context and cultural values. Guanxi, in particular, affects the franchisee decision-making process.

Citation

Yeung, R.M.W., Brookes, M. and Altinay, L. (2016), "The hospitality franchise purchase decision making process", International Journal of Contemporary Hospitality Management, Vol. 28 No. 5, pp. 1009-1025. https://doi.org/10.1108/IJCHM-08-2014-0399