Entrepreneurial Paradoxes in Business Format Franchising: An Empirical Survey of Finnish Franchisees

Abstract

MiiK- TUUJNANEN IS ASSOCIATE PROFESSOR at the University ofJyvaskyla, School of Business and Economics, Finland. Kimmiiiio Hyrsky is researcher at the Ministry of Trade and Industry in Finland. The study explores Finnish franchisees' entrepreneurial chai-acteristics and the advantages and disadvantages they encounter in operating their businesses. It adds to our existing knowledge about factors affecting success and failure in developing and sustaining amicable and rmiutually beneficial franchisee-franchisor r elationships. This is particularly relevant since recent evidence suggests that franichise survival rates and profitability are not so favourable as previously thought when compared to independent small businesses. The results displayed ttie paradoxical nature of franchisor-franchisee relationships. It was found that support given by the franchisor might gradually lose some or most of its value if it is not consistently renewed and updated. Thus, for instance, franchise fees often started to become, first a source of dissatisfaction, and later even a potential source of conflict. Moreover, the results indicated that although defining a franchisor as anl enti eprenietu- is geiierallv ac ceptecl, enltrepreneurial activities by franichisees could be viewed as a paradox. I'he motivational drives of fi-anchisees seemet to chan-ge as they become iioi- e experienced. The mioi-e experieiiced o enitrepreneuirial the franchisee was the imiore likely he or she was to becone frustrated with the frarichisor's goals.