Abstract
There is abundant evidence that franchises boost the economies of developed and emerging market economies. In Mexico, for example, despite its limited growth, the franchise system is dynamic. Over the past three decades, the inconsistent continuity of the global franchise business format may also be noted. The aim here is to analyse the factors linked to franchise continuity in the Mexican hospitality sector by applying panel data methodology to a sample of 253 hospitality sector chains between 2002 and 2016. The results showed that franchised outlets, proven and improved know-how, and market factors, under conditions of endogeneity, maintained a positive effect on the continuity of the franchise business format.
Highlights
Franchises are of importance both to companies and to the economy of a country, for which reason the study of their continuity is relevant (Acs, Armington, & Zhang, 2007; Bordonaba-Juste, Lucıa-Palacios, & Polo-Redondo, 2008; Dobbs et al, 2014; Michael & Combs, 2008; Ng & Keasey, 2010; Winter, Szulanski, Ringov & Jensen, 2012)
Successful franchises depend on both franchisor and franchisee, where both contribute to the same enterprise (Rodrıguez-Rad, Rondan-Catalun~a, & Macias-Molina, 2017)
The business growth of franchising is expected to move in a positive direction for market continuity to remain in place, the intensity of the effect will usually differ for the franchisor as much as for the franchisee, due to possible opportunistic behaviours by one CONTACT Esther Calderon-Monge ecalderon@ubu.es ß 2019 The Author(s)
Summary
ECONOMIC RESEARCH-EKONOMSKA ISTRAZIVANJA or the other party. Both the franchisor and the franchisee, have an expectation of continuity, generated by the mutual perception of a continuous economic relationship (Benoliel, 2009; Facanha, Resende, Cardoso, & Schro€der, 2013). From an academic point of view, this article fills a gap in the existing literature by focusing on franchise chain continuity rather than on franchise chain survival that, as has been mentioned, is understood to take place in a context of uncertainty, further complicating the continuity of the chain. This analysis considers aspects hitherto unexplored in a dynamic way in the franchise system, such as the management of the know-how and the business concept in a context of economic and political uncertainty. A discussion and analysis of the results will follow in the fourth section, and in the fifth, the conclusions and the limitations of the study will be presented
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