Trust and Fairness in Franchise Relationships

Abstract

Very few studies have investigated the key dimensions and consequences of trust and fairness in franchise relationships. Trust and fairness become especially important when a drastic change in the context of a relationship occurs. This paper therefore aims at generating theory about how franchisees’ perceptions of trust and fairness influence their responses toward their franchisors during franchisorled strategic change processes. On the basis of case studies regarding eight change processes in four Dutch drugstore franchise systems, the paper distinguishes a new level of trust in a franchise context: “franchise system trust” and discusses five instruments that franchisors can “institutionalize” in their franchise systems to influence their franchisees’ perceptions of franchise system trust. The results also demonstrate that franchisees’ perceptions of distrust and unfairness result in destructive responses toward the franchisor.