This case is designed to illustrate how to utilize a business intelligence framework and a geographic information system to make better decisions on franchise opening requests. The case started when ...Jong, the senior certified analytics professional, and his team were drafting a proposal presentation on a new franchise approval process to present to Tony, the director of Coffee Refresh. Currently, Coffee Refresh was experiencing a significant delay in approving franchise opening requests. In addition, the current approval process was relied on the appraisal teams’ evaluations, which involved self-judgment as to the accessibility and visibility of the store location in each franchise opening request and a manual count of the potential targeted customers at each location, which impacted how the appraisal teams estimated the expected revenue for each location. During the first meeting with Jong and his team, Tony was frustrated by the current evaluation process, resulting in a significant backlog of requests pending approval, which was far behind the target for its franchise branch expansion strategy. It had also been reported that the branches that opened during the past few years had a relatively low success ratio (losses between 4.8% and 16.5%) and that the rate of branch closures had increased from 2% to 7.5%. Currently, eight franchise opening requests were pending, and Jong had to provide a recommendation for which requests should be approved. Coffee Refresh could approve all of them instantly, approve some of them, or even decline all of them. This was a great opportunity for Jong and his team to revisit the current franchise approval process and to demonstrate how business intelligence systems could improve the request approval process as well as address the issues of the current franchises’ underperformance and the closure rates.
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Highly relevant in practice and challenging in terms of legal theory: contractual networks of independent businesses are widespread and diverse in modern business life. But what does "contractual ...business network" actually mean? How does it differ from other forms of cooperation, especially those under corporate law? Who is liable and how? Nina Marie Güttler succeeds in making contractual networks distinguishable on the basis of their legal, economic and sociological foundations and in classifying them dogmatically in German law. For franchise practice, she translates the insights gained into specific rights and obligations of franchisees. A work that is equally interesting for academia, the judiciary and the advocacy.
We present a proof of concept for using automated text analytic techniques to extract key information from lengthy B2B legal documents using BERT (Bidirectional Encoder Representations from ...Transformers), a machine learning-based natural language-processing framework. Our methodological contributions overcome the text length limitations of applying BERT to long legal documents. We identify franchise disclosure documents (FDDs) as an initial use case for these methodologies and a fruitful avenue for further exploration. From FDDs, we successfully extract answers to questions about firm structure, contractual obligations, finances, and litigation disclosures while also overcoming the technical challenges of applying BERT to large bodies of text. Question-and-answer techniques such as these, deployed in a B2B context, potentially can increase transparency and clarity for prospective exchange partners, addressing concerns in the literature about legal document readability and associated problems of information asymmetry and disclosure misunderstanding. Our discussion identifies promising contexts and an agenda for future scholarship focused on question-and-answer in B2B research.
•Applies Q&A techniques to B2B legal documents using Bidirectional Encoder Representations from Transformers (BERT).•Franchise Disclosure Documents (FDDs) initial use case for these methodologies.•Extracts answers from FDDs to questions about firm structure, contractual obligations, finances, and litigation disclosures.•Overcomes technical challenges of applying BERT to large bodies of text greater than 512 tokens.•Identifies promising contexts and an agenda for future scholarship focused on Q&A in B2B research.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
In this study, we examine how a country's institutional environment affects the international expansion activities of U.S. franchise companies. We draw on institutional and transaction cost theories ...to develop a model and a set of hypotheses regarding the effect of political, regulatory and infrastructural institutions, as well as economic instability, on international franchise expansion. Using a sample of U.S. franchise firms and data from a combination of secondary sources, we test these hypotheses by estimating a panel regression model. Our results demonstrate for the first time that, in addition to favorable political governance, a country's business climate, including entry regulations, taxes, and communications infrastructure, is an important predictor of foreign franchise firms' expansion into that country. Implications for practice and future research also are discussed.
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This paper explores social processes between franchisees as a way to control franchisee opportunism. Based on the literature of socio-psychological and interorganizational relationships, we argue ...that cohesion among franchisees is negatively associated with opportunistic behaviors that are potentially harmful to the whole chain. We use multilevel and multisource data to show that perceptions of cohesion among franchisees relate both to a) how franchisees apply know-how from franchisors (i.e., deviation from chains standards), and b) whether they transfer or withhold information that could be useful to the franchise system (i.e., information withholding). Our results underscore the importance of relationships among franchisees, an underexplored component of franchising.
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Although many franchisors choose to own some stores and franchise others, attempts to estimate the effect of franchising on store performance are hampered by an important selection issue: The ...franchisor may choose to assign the least desirable locations to franchisees. I overcome this issue by using a 2007 corporate sale that resulted in all franchisor-owned Applebee’s stores in Texas being sold to franchisees as a source of exogenous variation. I first find evidence that both observable and unobservable location-level factors were important in Applebee’s decision to own or franchise a store prior to the corporate sale. I next estimate the effect of franchising on store performance and find that franchising an Applebee’s store increases its alcohol revenues by 15%.
This paper was accepted by Joshua Gans, business strategy.
The nature of the relationship between employers and employees has been changing over the past three decades, with firms increasingly relying on contractors, temp agencies, and franchises rather than ...hiring employees directly. We investigate the impact of this transformation on the wage structure by following jobs that are moved outside the boundary of lead employers to contracting firms. We develop a new method for identifying outsourcing of food, cleaning, security, and logistics services in administrative data using the universe of social security records in Germany. We document a dramatic growth of domestic outsourcing in Germany since the early 1990s. Event-study analyses show that wages in outsourced jobs fall by approximately 10–15% relative to similar jobs that are not outsourced. We find evidence that the wage losses associated with outsourcing stem from a loss of firm-specific rents, suggesting that labor cost savings are an important reason firms choose to contract out these services. Finally, we tie the increase in outsourcing activity to broader changes in the German wage structure, in particular showing that outsourcing of cleaning, security, and logistics services alone accounts for around 9% of the increase in German wage inequality since the 1980s.
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Franchise relationships are prone to conflict. To safeguard the rights of individual franchisees, several states have legislated greater franchisor disclosure (registration law) ex ante and/or ...franchisor “termination for good cause” (relationship law) ex post. The impact of regulatory oversight on franchisor–franchisee conflict, however, remains unclear. Relying on agency theory arguments, the authors first assess the influence of the regulatory context, both by itself and in combination with the franchise ownership structure, on the incidence of litigated conflict. Conditional on litigation, they also predict the impact of franchise regulation on both the parties’ litigation initiation and resolution choices and the resulting outcomes. The authors test the hypotheses using a unique multisource archival database of 411 instances of litigation across 75 franchise systems observed over 17 years. The results indicate that the regulatory context, by itself as well as in combination with the franchise ownership structure, significantly shapes parties’ conflict management choices. The authors also find evidence of a trade-off between prevailing in the particular conflict and achieving franchise system growth objectives.
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Franchisors capitalize on franchisee entrepreneurial capacity to grow. However, enabling franchisees to develop their ventures may damage system consistency. This dilemma makes conflict particularly ...prevalent in the field of franchising. Nevertheless, prior research has reported an incomplete picture of factors leading to serious disagreement and premature termination in franchise partnerships. We address this gap, first, by adding the entrepreneurial autonomy of franchisees as a relevant but underexplored source of conflict and, second, by providing a more fine-grained analysis of franchisors' versus franchisees' drivers of termination. Specifically, we focus on the controversial issues of pricing and local advertising policies and analyze how expanding franchisees' entrepreneurial autonomy in these decision areas is related to contract terminations depending on who ended the relationship (the franchisor or a franchisee). The study also highlights less controversial requirements and conditions (e.g., upfront investments, franchisor experience ...) that may reduce early terminations. Our empirical objectives are met by using survey data from a sample of franchisor companies. The results show how the performance outcomes of entrepreneurial autonomy differ depending on the decision area in which it is exercised. Results also throw light on the consequences of various critical franchise policies that may be masked if both types of termination (franchisors vs. franchisees) are considered together.
This is one of the first studies to explore customer retention in reference to the franchisee-customer relationship. A subsequent objective was to examine localization and standardization from a ...franchise unit and system-level perspective. Data was collected using a self-administered survey based on customers of pet grooming services in Australia. Findings suggest that the addition of a customer retention perspective reveals a greater depth to the franchisee-customer relationship. Importantly, this implies that there are additional factors likely to influence franchisee-customer retention within franchise outlets. We suggest that individual franchise units, in cooperation with local customers, should co-create local marketing initiatives.
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