Franchise Agreement Research Articles

Opportunistic behaviour in hospitality franchise agreements

This paper combines agency and social exchange theoretic perspectives to examine opportunistic behaviour in hospitality franchise agreements. It identifies and analyses the opportunistic behaviour of both franchisors and franchisees through a qualitative study of Turkish hospitality franchisees. A model of opportunistic behaviour and social exchange is developed from the study for further empirical testing. The model depicts different categories of franchisee behaviour, how franchisee behaviour is influenced by the behaviour of franchisors, the relevant characteristics of social exchanges between franchisors and franchisees, and the outcomes of those exchanges. As such, the study provides a complementary perspective of franchise opportunism and exchange relationships. A number of implications for hospitality franchise stakeholders are identified as a result.

The Necessity of Establishing Laws for Fair Franchise Agreements : Focusing on Abuse from the Dominant Bargaining Position

The Necessity of Establishing Laws for Fair Franchise Agreements : Focusing on Abuse from the Dominant Bargaining Position

Factors that Influence Student's Decision in Starting-up Service Franchise Business in Bandung

Abstract Starting a whole new business often seems to be too risky. There are too many uncertainties pertaining to the amount of capital required, the sales revenue potentially generated and the right management style required to achieve success. Franchise business, with an already well-established systems and operating procedures, provides a way for new entrepreneurs to invest in a more forecastable and profitable future. At the macro level, franchise business is like a vehicle driving the lifestyle and income of a population in the right direction for long term economics growth. Indonesia, being the one of the largest economies in Asia, offers excellent market potential for franchising. Having an adequate and proven systems already in place, franchise business is perceived as an appropriate stepping stone for building sustainable business environment in Indonesia. The allure of starting a franchise business in mitigating the uncertainties faced by an independent start-up to a large extent, therefore, is worth its weight in gold. This research aims to develop the know-how of starting-up effective franchise business to penetrate Indonesian market. The study hopes to establish a comprehensive guide for the increasing number of aspiring entrepreneurs to boost their confidence in starting up service franchise business in Bandung. This research uses both qualitative and quantitative research method. Through quantitative research, the author collected data through several surveys and questionnaires which were distributed among 100 business management students from several universities in Bandung such as Institute Technology Bandung, Parahyangan Catholic University, Padjajaran University, and Maranatha Christian University. Subsequently, qualitative research was also conducted to clarify ambiguous situations or discover ideas that may generate potentially-profitable business opportunities. Common data collection methods used in this qualitative research includes in-depth interview with related franchisor in the service industry. Researcher performed pre-test analysis to the data collected to ensure the constructs’ validity and reliability. Data were then analyzed, computed and presented in various simplified forms (writing, graphics, tables, and numbers) for easy comprehension and interpretation. Our conclusion is that with adequate systems of franchise business already in place, it provides a suitable platform for the students to embark on their entrepreneurial journey. Purchasing a franchise business license is one common option. However, a substantial amount of attention has to be given to the franchise mechanism model i.e. factors such as: costs, controls, and termination/renewals of contracts. In the process of selecting the right franchise business, substantiate knowledge and careful review of the franchise agreement is of critical importance to prevent mislead and confusion. This paper will highlight and discuss these issues in further details.

Современное состояние отрасли звероводства в Иркутской области и меры по повышению её эффективности

This article examines the status of agriculture in the Irkutsk region in the dynamics. It identifies the main reasons for the decline of major products production. The paper considers the current status of fur farming industry in the region. It may be noted, that due to the reduction of livestock and pigs, the production of milk and meat was significantly reduced. Only the production of eggs looks good, thanks to the timely conduct of agricultural integration in the Agricultural Producers Cooperative “Okinckiy” and Agricultural JSC “Belorechenskoe”. Presently, among of 4 fur farms of Priangarya, there is only one, JSC “Bolsherechensky” is functioning. Currently, this company protected in the government commission an investment project for the development of fur farming in 2011-2015 and has begun to implement it. As one of the effective tools for the development of the industry, they offer a scheme of relationships, based on a franchising agreement, where as the franchisor will perform JSC “Bolsherechensky”, and as a franchisee - slaughter area.

Fair Trade Community Café Expansion

AbstractThis case concerns the expansion of a small café in the Atlantic provinces of Canada. Ray Merriam had successfully operated a fair trade café in Truro for two years and was ready to expand his business by opening cafés in other locations. He has received an offer from an investor for partnership in a new café in the same time. While Ray was really excited about the investment, he had been considering expanding the business through franchising. Students will have an opportunity to research partnership and franchise agreements. They are expected to analyze the advantages and disadvantages of each and make a recommendation to Ray. The typical issues arising in a franchise or partnership agreement should be addressed. This practical experience would likely be invaluable for the future of many students who open their own businesses.

FRANCHISE CONTRACT AND GOOD FAITH

Franchise is a widespread business model in countries with developed economies. Although that in Albania there are few franchising relations, the Albanian Civil Code provides franchising as a contract. The franchise contract is a binding agreement where the franchiser grants the franchisee the right to use the trademark and the operating system of the franchiser, mutually fulfilling rights and duties derived by this contract. The most important duty of the franchiser is to make available to the franchisee a standardized set of immaterial rights, models, charts, profit, organization and trade ideas, and other appropriate knowledge for the development of trade. During the negotiations, the parties have to show each other the commercial affairs conditions dealing with the franchise agreement and the franchise obligations particular program. The information during the negotiations must be confidential and such must remain, even if the contract is not concluded. The Albanian Civil Code provides that in general during the contract negotiations, the parties must act in good faith towards each other. In case of franchise contract the good faith is specifically required by law, due to the fact that the parties normally provide each other with important and economical valuable information. The aim of this paper is to realize an overview of a new contract, as franchising and its importance in economic relations. This paper will clarify the Albanian legal provisions on franchise contract, the rights and duties of each party. It will be highlighted the role of good faith in negotiations, how the parties must act and the possibility to compensate potential damages. It is about one principle, the Good Faith Principle, that Civil Law jurisdiction and Common Law jurisdictions have generally two different approaches. The paper will show the changes in legal provisions of some European countries regarding good faith in franchise contracts. DOI: 10.5901/mjss.2014.v5n22p313

네일샵의 경영형태 비교를 통한 프랜차이즈 선택동기와 경영성과 분석에 대한 연구

Abstract This study is to identify whether a difference exists between factors that influence the time when independently owned nail shops and franchises commence business. Futhermore, we set out to investigate the criteria for nail shop owners use when selecting franchise nail shops with a relatively high level of customer satisfaction and performance, to discuss the necessity of a franchise agreement. An actual analysis has revealed that there is a difference in factors that influence management at the time of and after the inception of independently owned shops and franchise nail shops. Business performance of franchise shops, as a result of evaluating customer satisfaction or monthly sales, turns out to be higher than independently owned shops. The criteria for selecting franchise stores includes intensity of competitiveness in the same business district, accessibility, ability to keep up with current trends, directors’ skills, color scheme, excellence of company logo, interesting interior, reasonable prices compared to the level of cosmetic procedure and efforts to motivate employees. Overall, the deciding factor enabling shops to operate continuously is constant supervision from the headquarters of the franchise company.

Project for a Reform of the Contract Law in Japan and Its Impact on Franchise Agreements

The reform of the contract law has been discussed in Japan since 2006, first as a project of private group of academics, followed by the official legislative process at the Legislative Council of the Ministry of Justice. From the Interim Report of the Council published in February 2013, one can foresee the likely outcome of the reform, which will be drafted into a bill to be submitted to the Diet in 2015. The reform will affect the practice of franchising significantly, because franchising is a business organization based on a set of carefully drafted contractual provisions. Unfortunately, the proposals included in the Interim Report do not pay sufficient attention to such practice of well-drafted contracts and could subject the practice of franchising to the risks of reducing the discipline over franchise networks through the enforcement of the franchise agreement. Further considerations about the optimal degree of predictability of courts' interventions is strongly required.

The dynamics and evolution of knowledge transfer in international master franchise agreements

The paper identifies and evaluates the antecedents, contextual factors and inter-organisational processes that influence knowledge transfer in international hotel master franchise agreements and how these evolve from the perspective of both franchisors and franchisees. A single, purposively selected in-depth qualitative case study reveals the specific factors relevant to knowledge transfer at different stages of the franchise agreement. Drawing on the alliance literature, the impact of four partner-specific variables on inter-organisational design processes used to transfer knowledge and on three antecedents to knowledge transfer; shared identity, absorptive capacity and casual ambiguity is identified. The study contributes to our understanding of the dynamics and evolution of knowledge transfer in master franchise agreements by highlighting the relative importance of partner-specific variables and relational management to knowledge transfer evolution and the relative importance of shared identity as an antecedent to knowledge transfer in these agreements

'Sticky' Arbitration Clauses?: The Use of Arbitration Clauses after Concepcion and Amex

We present the results of the first empirical study of the extent to which businesses have switched to arbitration after AT&T Mobility LLC v. Concepcion. After the Supreme Court’s decision in Concepcion, commentators predicted that every business soon would use an arbitration clause, coupled with a class arbitration waiver, in their standard form contracts to avoid the risk of class actions. We examine two samples of franchise agreements: one sample in which we track changes in arbitration clauses since 1999, and a broader sample focusing on changes since 2011, immediately before Concepcion was decided. Our central finding is consistent across both samples of franchise agreements: the use of arbitration clauses in franchise agreements has increased since Concepcion, but not dramatically, and most franchisors have not switched to arbitration. While our results necessarily are limited to franchise agreements and may not be generalizable to consumer and employment contracts, they nonetheless provide valuable evidence on how businesses are responding to Concepcion.Given our finding that only a handful of franchisors have switched to arbitration clauses since Concepcion, the next question is “why not”? We reexamine the assumptions underlying the predictions of a switch to arbitration ― that there is no reason for a business not to use an arbitral class waiver and that businesses readily and costlessly can and will modify their form contracts ― and find reason to question both. By using an arbitration clause, businesses do more than simply contract out of class actions: they contract for a bundle of dispute resolution services, including, for example, a very limited right to appeal. For businesses that perceive themselves as unlikely to be sued in a class action, these “bundling costs” may discourage them from using an arbitration clause. In addition, even standard form contracts might be sticky ― i.e., resistant to change even if change might be in the business’s best interest. We find empirical support for both possible explanations for why many franchisors have not begun using arbitration clauses after Concepcion.Finally, we consider the potential implications of the Court’s subsequent decision in American Express Cos. v. Italian Colors Restaurant for the future use of arbitration clauses. To the extent bundling costs deter the use of arbitral class waivers, we still would not expect all or most businesses to switch to arbitration even after Amex. Likewise, to the extent contract stickiness explains the limited switch to arbitration, Amex will have limited effect. In fact, Amex might actually make class action waivers that are not part of an arbitration clause more attractive than before. Although on its facts Amex addresses the enforceability of arbitral class waivers, much of the Court’s reasoning applies as well to non-arbitral class waivers, which avoid the bundling costs of an arbitral class waiver. Of course, even after Amex much legal uncertainty remains about the enforceability of non-arbitral class waivers. But on this broad interpretation, Amex on the margin increases the attractiveness of non-arbitral class waivers and might result in some uptick in their use (an increase that was occurring even before Amex, at least in franchise agreements).

КОРПОРАТИВНАЯ КУЛЬТУРА РЕСТОРАННЫХ СЕТЕЙ

The article describes the corporate culture of restaurant chains in Russia, and the main elements of the corporate culture. Formulated impact of corporate culture on the management processes restaurant chains operating under a franchise agreement.

Railway Franchising in Great Britain and Effects of the 2008/09 Economic Recession

Since 2008 Britain's passenger railway franchises have been under twin stresses. Due to economic recession, the growth in passengers and revenues temporarily slowed or reversed whilst franchise agreements require train operators to increase financial commitments from their franchise agreements. At the same time, government was cutting its share of rail revenue budgets. National Express East Coast was unable to meet its franchise commitments and its contract was cancelled. This paper analyses the differing effects of the 2008/09 economic recession on rail usage in each of the London and South East commuter, Long Distance intercity, and Regional franchise sectors and on rail industry finances. The case for longer franchises is considered both as a means of securing more private sector investment in rolling stock, stations, and rail services, and as a mechanism for surviving temporary economic downturns.

Conceptualizing Franchisee-based Brand Equity - A Framework of the Sources and Outcomes of the Brand’s Added Value for Franchisees

Alongside business practices, the franchisor’s brand is one of the two basic constituents of the franchise package that the franchisees buy into, and one of the major resources that franchisees seek when engaging in a franchise agreement. This paper addresses the value added by the brand to the franchise package from the franchisees’ perspective by considering (a) the sources of this added value and (b) its impact on franchisees’ intentions and behaviors. Based on previous literature on how brands generate value for consumers and firms, we first extend the concept of brand equity to franchising and propose a theoretical framework of the sources and outcomes of franchisee-based brand equity. We then explore franchisees’ perspective on the brand’s added value by conducting sixteen interviews with franchisees in France. The interviews combined with previous literature reveal that franchisees consider that the brand adds value directly by offering them functional, symbolic, experiential, economic and relational benefits, as well as indirectly by driving positive responses from consumers, employees and financial partners toward the branded franchised unit. Surprisingly, the symbolic benefits emerge as the strongest direct benefits. In turn, this added value attracts franchisees to enter the network, motivates their intention to continue in the franchise relationship and acts as a palliative for organizational problems encountered by franchisees. These findings indicate that franchisors should strongly integrate the brand in their value proposition in order to drive positive responses from their potential and current franchisees.

How Franchisors Describe Their Ideal Entrepreneurial Franchisee

<span style="font-family: Times New Roman; font-size: small;"> </span><p style="margin: 0in 0.5in 0pt; text-align: justify;" class="MsoNormal"><span style="font-family: Times New Roman;"><span style="color: black; font-size: 10pt; mso-themecolor: text1; mso-fareast-font-family: "&#39";">This article has two main objectives:<span style="mso-spacerun: yes;"> </span>first, to identify the various entrepreneurial profiles of the ideal franchisee, as perceived by franchisors, and second, to describe and compare each profile on the basis of system characteristics. </span><span style="color: black; font-size: 10pt; mso-themecolor: text1;">Qualitative research of franchisors </span><span style="color: black; font-size: 10pt; mso-themecolor: text1; mso-fareast-font-family: "&#39";">is </span><span style="color: black; font-size: 10pt; mso-themecolor: text1;">coupled with analyses of data collected from 90 franchise systems.</span><span style="color: black; font-size: 10pt; mso-themecolor: text1; mso-fareast-font-family: "&#39";"> This procedure offers strong sequential evidence in that the results of the first method inform the second-stage sampling and instrumentation (Greene et al., 1989). Th</span><span style="color: black; font-size: 10pt; mso-themecolor: text1;">e study reveals </span><span style="color: black; font-size: 10pt; mso-themecolor: text1; mso-fareast-font-family: "&#39";">three main entrepreneurial profiles of prospective franchisees - system developer, in-store craftsperson, and opportunistic investor. It also establishes that the term of the franchise agreement and the level of system plurality are two factors on which entrepreneurial profiles differ. These results offer strong support for franchisors in their selection strategy of future franchise partners.</span><strong style="mso-bidi-font-weight: normal;"><span style="color: black; font-size: 10pt; mso-themecolor: text1;"></span></strong></span></p><span style="font-family: Times New Roman; font-size: small;"> </span>

A conceptual framework for R&D strategic alliance assessment for Taiwan’s biotechnology industry

With the rapid development of technology, technology advancement is harder and harder with more and more risks in technology innovation, thus enterprises can’t carry out technology innovation program alone. The development of the emergence of the biotechnology industries provides valuable insights into the role of strategic alliances and networking that shaped the synergy between both industries. This paper provides a step by step methodology to evaluate R&D strategic alliances problem in Taiwan biotechnology Industry. The purpose of this paper is to formalize the choice of R&D strategic alliance modes for an individual multinational enterprise among Joint Venture, Franchise agreement, Licensing Agreement, Subcontract and Merger/acquisition. An illustrative example is presented to demonstrate the applicability of the proposed methodology. The proposed approach also provides a relatively simple and well suited decision making tool for this type of strategic decision making problem. This evaluation mode was identified as a workable method.

The Effect of Contract Regulation on Franchising

In many sectors, such as retailing or fast food, franchising agreements are ubiquitous. On top of its empirical relevance, franchising has developed into a testbed for contract theory, due to its very good data availability. This is highlighted by a recent book by Blair and Lafontaine (2005), which provides a nice overview of the voluminous empirical literature on the topic. For example, franchising data have been employed to investigate the risk–incentive trade-off predicted by moral-hazard models (see, e.g., Lafontaine and Bhattacharyya, 1995), or the relative merit of vertical integration as well as its coexistence with franchising (see, e.g., Lafontaine and Shaw, 2005). Klick, Kobayashi, and Ribstein (2012) add to the empirical literature on franchising by studying the effects of legal termination restrictions in franchising relationships, using U.S. data. Roughly speaking, in the absence of a termination restriction, the franchisor is allowed to terminate his relationship with the franchisee at will. First, the authors are interested in the question how the presence of termination restrictions affects the attractiveness of franchising as the organizational form of choice. From an intuitive perspective, the presence of termination restrictions seems to deter franchisor opportunism, but might lead to more franchisee opportunism: franchisees knowing that they cannot easily be terminated might provide less effort, while franchisors might be prevented from taking over successful outlets themselves. Consequently, from a theoretical perspective the effect of termination restrictions on the attractiveness of franchising relative to other organizational forms seems to be ambiguous. Second, even if termination restrictions are in place, they might not be binding, in the sense that contracting around might be possible. That is, franchisor and franchisee might be allowed to lift termination restrictions by specifying an alternative arrangement in their franchising agreement. Klick, Kobayashi, and Ribstein (2012) hypothesize that, if such contracting around is possible, the presence or absence of legal termination restrictions should not matter for the choice of organizational form (at least in a Coasian world).

Industrial franchising strategies: some transactional concerns and managerial propositions

Even though industrial franchising agreements are common in the licensing world, the way patent and brand licensing interact together in such contracts is an issue that remains unexplored. This article aims to fill this gap by providing a simple model of brand licensing that enables managers to ground their decisions on this topic. More precisely I developed in this article a model that sheds light on the dynamic tradeoffs that arise when the license includes a trademark transfer. I first showed that the difference between the temporal horizons of the partners leads the licensee to under invest into the brand goodwill, in a way that increases as the term of the contract becomes closer. I then show how this problem can be solved at least partially by properly shaping the agreement. I finally used a licensing database of 553 contracts from the French Institute of Intellectual Property in order to see how the monitoring clauses, the resources transferred and the contract duration interact.

Innowacyjność sieci franczyzowych

A lasting success of business activities regardless of their location, nature, size and industry isnow dependent on the degree of innovation. Innovation is a way for modern enterprises to survive in thechanging market, and a response to customer needs, including their formation, but also seeking waysto develop the internal businesses, particularly in its organization and ideas. Innovation today cannotbe limited to the creation of new technological solutions, and then their implementation into industrialproduction. A particular kind of a modern business model, which has been recently developing inPoland and which is an example of an innovative organization in many fields, is the franchise, the focusof this article.In the article, the principles of operation and the current state of development of franchise networksin Poland is explained, and then the innovative features of franchise business in general, resultingfrom franchise agreements, are analyzed. In the final part of the article, examples of innovations arepresented: technological, market and organizational innovations, used in various franchise industries.In the article, the author also pays attention to the unique character of the franchise system, basedon assistance and transfer of know-how to its franchisees by the entrepreneur, which reduces therisk arising from the start-up of new economic activity, and affects the fast and multi-dimensionaldevelopment of franchise networks.

Franchise partner selection: perspectives of franchisors and franchisees

Purpose – This paper aims to identify the partner selection criteria employed both by franchisors and franchisees in master franchise agreements and evaluate how different selection criteria interact within the selection process and influence the decisions taken.

International master franchise agreements

PurposeThis paper seeks to examine the inter‐organisational processes used to control international master franchise agreements from operational, relational and evolutionary perspectives.Design/methodology/approachThe research is undertaken through a qualitative, in‐depth case study in the international hotel industry. The case comprises an international master franchise agreement between a large US‐based hotel franchisor and its European master franchisee.FindingsThe study identifies the inter‐related nature of operational and relational control processes and how these evolve over the life of a master franchise agreement. It reveals how the perceptions of franchise members serve to enhance or inhibit the development of relational norms and how these, in turn, impact on the predominant type of control and the specific inter‐organisational processes employed.Research limitations/implicationsThe research is based on a single in‐depth case study within one industrial context and the universality of the findings may therefore be limited.Practical implicationsThe paper offers insights to managers of international master franchise agreements on the interaction between members' perceptions, relational norms developed and the inter‐organisational processes used to control the agreement. It also reveals how the use of contractual controls can inhibit the development of relational norms and negatively impact on relationships between franchisors and master franchisees. The findings presented may have relevance to managers of other types of international alliance agreements.Originality/valueBy drawing on both the alliance and franchise literature and employing a qualitative approach, the study helps to close a gap in the current international franchise literature through the identification of specific inter‐organisational processes for control within international master franchise agreements, how these evolve in respect of relational norms and how these are underpinned by perceptions of franchisor and franchisee members.