Examining the Balance between Franchisor Control and Franchisee Autonomy in Human Resource Management

Abstract

The franchise model has transformed modern retailing and the economic effects have been experienced on an international scale. Although the contemporary approach to franchising was only developed half a century ago, it has quickly evolved into a highly effective, profitable and widely adopted business strategy, particularly in the Australian market. Despite the current profusion of franchising and the potential for continued growth, fundamental questions about the management of people in these organisations remain relatively unexplored. Franchising presents a unique composition of autonomy and control. The autonomy of franchisees is located midway between that of employed managers and independent business owners, while the powerful franchisor controls core business processes such as marketing and product development. Although agency theory suggests that heavy franchisor control over certain functions is integral to the success of the franchise model, the applicability of this concept to human resource management (HRM) is unclear. This thesis addresses research deficiencies at the junction of HRM and franchising through three research questions: how is the approach to HRM enacted in the franchise relationship; what factors influence the approach to HRM in the franchise relationship, and; what are the implications of the approach to HRM for franchisees? The HR department is critical to determining the approach an organisation adopts to managing human resources. In this thesis, the work conducted by the HR department was identified and classified according to existing models, enabling comparisons with the roles performed in more traditional organisations. Determination of these roles was regarded as an outcome of the strategic decision-making process, influenced by certain contextual variables. Accordingly, this thesis considers how strategic HRM decision-making in franchises is impacted by internal and external factors determined by an extensive review of the relevant literature.