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Expansion through multiple unit franchising: Australian franchisors reveal their motivations
Journal article   Peer reviewed

Expansion through multiple unit franchising: Australian franchisors reveal their motivations

S Weaven and Lorelle Frazer
International Small Business Journal, Vol.25(2), pp.173-205
2007
url
https://doi.org/10.1177/0266242607074524View
Published Version

Abstract

agency costs Australia expansion multiple unit franchising opportunism rewards system uniformity
In this article we explore strategic reasons justifying the recent emergence of multiple unit franchising arrangements within Australia from the perspective of the franchisor. Extending resource constraints, efficiency and agency rationales explaining organizational choice, the present study suggests that franchisors encourage franchisee subsystem development as it affords strategic, operational and performance advantages. Dimensions including agency cost minimization, system-wide uniformity, franchise system brand value, reward strategies, and subsystem unit (geographical) proximity and intra-system competition, were found to be important. Less important elements included ownership redirection, system adaptability, local market innovation and franchisee opportunism motives. Given the exploratory nature of this research, in-depth interviews with 23 franchisors were used to collect data.The preliminary research evidence has important implications for franchising theorists and practitioners and, in addition, provides a platform on which future research can be developed to further understand multiple unit franchising arrangements. © 2007 Sage Publications.

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