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Plural Form and Franchisors Performance : Early Empirical Findings From Europe

  • Frédéric Perdreau


    (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne)

  • Anne-Laure Le Nadant


    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen)

  • Gérard Cliquet


    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen)

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.

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Paper provided by HAL in its series Post-Print with number halshs-00522601.

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Date of creation: Nov 2010
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Publication status: Published, New Developments in the Theory of Networks: Franchising, Cooperatives and Alliances, Springer Verlag (Ed.), 2010, 88-105
Handle: RePEc:hal:journl:halshs-00522601
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  1. Perrigot, Rozenn & Cliquet, Gérard & Piot-Lepetit, Isabelle, 2009. "Plural form chain and efficiency: Insights from the French hotel chains and the DEA methodology," European Management Journal, Elsevier, vol. 27(4), pages 268-280, August.
  2. Knott, Anne Marie & McKelvey, Bill, 1999. "Nirvana efficiency: a comparative test of residual claims and routines," Journal of Economic Behavior & Organization, Elsevier, vol. 38(4), pages 365-383, April.
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