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Plural Form and Franchisors Performance : Early Empirical Findings From Europe

Author

Listed:
  • Frédéric Perdreau

    (COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne)

  • Anne-Laure Le Nadant

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Gérard Cliquet

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper deals with the relationships between plural form and performance in franchising networks in Europe. It is proposed that a franchisor's life cycle stage and human capital assets influence the relationship between plural form and performance. The model has been estimated using panel data on 41 publicly listed European franchising networks in the 1998-2007 period. The proportion of network-franchised units to the total number of its units in its distribution system is used as the indicator of its plural form (franchise proportion). Following an instrumental approach, the network performance is measured at the franchisor level by its industry-adjusted Return on Assets (ROA) and a relative stock market valuation measure of intangible human capital is used. The early results show that the impact of franchise proportion on performance is greater for franchisors with high intangible human capital compared to franchisors with low intangible human capital. Overall, results provide support for the contention that the franchisors' performance is contingent on the ‘fit' between governance structure (franchise proportion) and resources (critical human assets). In contrast, strong evidence that the governance/performance relationship is contingent on life cycle stage or franchisor's age is not found. But, our results suggest that franchisor's age could weaken the relationship between franchise proportion and performance. These results might suggest that younger franchisors with high human capital should increase their franchise proportion to enhance their financial performance.

Suggested Citation

  • Frédéric Perdreau & Anne-Laure Le Nadant & Gérard Cliquet, 2010. "Plural Form and Franchisors Performance : Early Empirical Findings From Europe," Post-Print halshs-00522601, HAL.
    • Handle: RePEc:hal:journl:halshs-00522601
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00522601
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    References listed on IDEAS

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    Cited by:

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    2. Paul Amadieu & Karine Picot-Coupey & Jean-Laurent Viviani, 2013. "Organizational choices and financial performance: the case of company-owned stores, franchisee-owned stores and stores-within-a-store among French fashion retailers," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201335, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    3. Brookes, Maureen & Roper, Angela, 2012. "Realising plural-form benefits in international hotel chains," Tourism Management, Elsevier, vol. 33(3), pages 580-591.
    4. Muriel Fadairo & Cintya Lanchimba Lopez, 2012. "Performance in distribution systems : What is the influence of the upstream firm’s organizational choices ?," Working Papers 1224, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    5. Kacker, Manish & Perrigot, Rozenn, 2016. "Retailer use of a professional social media network: Insights from franchising," Journal of Retailing and Consumer Services, Elsevier, vol. 30(C), pages 222-233.
    6. Madanoglu, Melih & Lee, Kyuho & Castrogiovanni, Gary J., 2011. "Franchising and firm financial performance among U.S. restaurants," Journal of Retailing, Elsevier, vol. 87(3), pages 406-417.

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    Keywords

    franchising; human capital; governance; performance;
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