The Brazilian Franchising Puzzle: What Explains Network Quality, Growth and Franchisees’ Satisfaction

Abstract

Franchising is usually approached in economics literature as a search for the reasoning behind an organization’s decision to opt for this model. In light of this situation, this study aims to find whether the current economics literature is capable of taking the next step from the origins of the franchising network and explaining three patterns of franchise operations: growth of network, quality of network and franchisee satisfaction with the franchisor. The method utilized in this study is descriptive explanatory, with the use of multiple linear regressions for the data analysis, which allows for the analysis of the relationship between independent and dependent variables. Secondary data were used from the Brazilian Franchising Association, from which the independent variables were taken, and from the Franchise Guide Journal of the Small Companies & Big Business Journal, from which the dependent variables were taken. These two sources are reliable authorities on the subject in the Brazilian market, and their complementary, mutual use for this research enhances the reliability of the database. The findings suggest that franchising in economics literature is not robust enough to explain growth and quality of networks, as well as franchisee–franchisor satisfaction, and it is suggested that the current theory needs to be further developed in order to take further steps in the concept of franchising.