An Ounce of Prevention Is Worth a Pound of Cure

Abstract

The paper examines franchise owners' satisfaction with their businesses. Job satisfaction, its antecedents and outcomes have been a popular topic in organizational studies whereas very few investigations have focused on entrepreneurial satisfaction. This is rather surprising since satisfaction has been emphasized as a fundamental measure for individual entrepreneurs (Cooper & Artz 1993). Especially in franchising, satisfaction is a key concept in understanding channel member behavior (Robicheaux & El-Ansary 1975–1976). A six-page questionnaire was mailed to 815 franchisees representing thirty-six retail, service, restaurant, café and fast food franchises. This nationwide sample represented more than forty percent of the total amount of franchisors and over half of all franchisees in Finland. A response rate of fortytwo percent (n = 339) was obtained after two mailings and a reminder post card. Subsequently, the data were enlarged and non-response bias was investigated by conducting 143 phone interviews. After a careful examination of the data sets, no significant bias was discovered. Consequently, data sets were combined (n = 482). The final response rate was nearly sixty percent. On the basis of past literature, two single item measures and a set of multiple item measures for quantifying satisfaction were developed. Single item variables measured franchisees' overall satisfaction. Four multiple item scales pertaining to franchise owners' business domains and one multiple measure tapping to franchisees' business environment were created by employing a principal component analysis. Both reliability and validity of the measures were evaluated. Eight hypotheses were tested, of which seven hypotheses were empirically supported. The statistical methods included ttests and a multiple regression analysis and a discriminant analysis. Franchisees were found to be fairly satisfied with their businesses. This conclusion was supported by the scores of the particular satisfaction. Moreover, franchisees were committed to their franchises. Particular satisfaction components and postengagement intention explained nearly fortyfive percent of the total variance of franchisees' overall satisfaction. Satisfaction and postengagement intention predicted franchisees' inclination to continue the operation. Finally, the study presents implications for both franchisors and franchisees as well as propositions for future research.