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Drivers of performance of franchisees: A multi-level analysis

Drivers of performance of franchisees: A multi-level analysis. The aim of this study is to examine the drivers of performance of franchisee organizations. Adopting agency theory, we hypothesize that age, size and obligatory assortment decided by central franchisors, distribution of power from franchisors to franchisees and frequency of franchisor’s visits to franchisee are positively associated with theperformance of franchisees. | Journal of Economics and Development, Vol.19, No.2, August 2017, pp. 107-122 ISSN 1859 0020 Drivers of Performance of Franchisees: A Multi-level Analysis Vo Van Dut Can Tho University, Vietnam E-mail: vvdut@ctu.edu.vn Tran Thu Huong Can Tho University, Vietnam E-mail: huongtran@ctu.edu.vn Nguyen Huu Dang Can Tho University, Vietnam E-mail: nhdang@ctu.edu.vn Abstract The aim of this study is to examine the drivers of performance of franchisee organizations. Adopting agency theory, we hypothesize that age, size and obligatory assortment decided by central franchisors, distribution of power from franchisors to franchisees and frequency of franchisor’s visits to franchisee are positively associated with the performance of franchisees. The survey data of 186 franchisees in four European countries are used to test the proposed hypotheses. Principal component analysis and a hierarchical linear model are applied in this study. Empirical results reveal that whether the proposed hypotheses are statistically supported depend correspondingly on how franchisees’ performance is measured. The paper provides some implications for franchisee literature. Keywords: Age; franchisee performance; obligatory assortment; power; size. Journal of Economics and Development 107 Vol. 19, No.2, August 2017 1. Introduction In recent decades, franchising is considered as one of the fastest growing forms of business in the global economy (Croonen and Brand, 2015; Justis and Judd, 1986) and represents nearly one third of domestic retail sales in many countries (Boe et al., 1989). Kedia et al. (1994) show that franchising is an especially effective case of licensing in which the franchisor provides the use of a trademark or service mark, assistance in opening the business and training for the franchisee. There are several reasons for the preference to employ franchising rather than other strategies since it provides benefits for both franchisors and franchisees. On the one hand, franchising .