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Partner Empowerment and Relationship Failure in Franchising

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  • Susana López‐bayón
  • Begoña López‐fernández

Abstract

Franchisors must empower franchisees to take decisions on a package of peripheral elements in response to pressure for local adaptations and for entrepreneurial autonomy. However, little is known about which specific elements should be decentralized and to what extent adaptation of such elements affects disputes between franchisor and franchisees. This study explores these issues by analyzing which decision rights should be franchisees’ responsibility to reduce early terminations instigated by the franchisor. The results show that delegating decision rights on local advertising and personnel reduces early terminations while delegation of pricing tends to increase them, regardless of the size of the system. Interestingly, successful delegation in other decision‐areas is contingent on the brand‐name value. More specifically, only larger chains seem to benefit from delegating assortment and decoration decisions.

Suggested Citation

  • Susana López‐bayón & Begoña López‐fernández, 2016. "Partner Empowerment and Relationship Failure in Franchising," Journal of Small Business Management, Taylor & Francis Journals, vol. 54(4), pages 1059-1079, October.
    • Handle: RePEc:taf:ujbmxx:v:54:y:2016:i:4:p:1059-1079
    DOI: 10.1111/jsbm.12234
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