Multi-unit franchising from franchisor and franchisee perspectives: Antecedents, performance outcomes, and the optimal mini-chain size

Abstract

We assess in an integrated model the antecedents of multi-unit franchising as well as its outcomes. Based on both franchisor and franchisee data, the results related to the antecedents of multi-unit franchising are explained by the resource-based view of the firm and transaction cost economics. Furthermore, our study demonstrates that multi-unit franchising leads to positive franchisor consequences in the short term but negative outcomes for multi-unit franchisees. Owning more than three units leads to a significant drop in sales and profits per unit. These findings show that the supposed positive link between multi-unit franchising and franchisor and franchisee outcomes is not linear and thus challenges the idea that multi-unit franchising creates a win-win situation for the system and the individual franchisees.