E-Business Strategy in Franchise Relationship Management

E-Business Strategy in Franchise Relationship Management

Ye-Sho Chen (Louisiana State University, USA), Chuanlan Liu (Louisiana State University, USA and Central University of Finance and Economics, China), Qingfeng Zeng (Shanghai University of Finance and Economics, China) and Renato F. L. Azevedo (University of Illinois at Urbana-Champaign, USA)
DOI: 10.4018/jsita.2012010104
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Abstract

Franchising as a global growth strategy, especially in emerging markets, is gaining its popularity. For example, the U.S. Commercial Service estimated that China, having over 2,600 brands with 200,000 franchised retail stores in over 80 sectors, is now the largest franchise market in the world. The popularity of franchising continues to increase, as people witness an emergence of a new e-business model, Netchising, which is the combination power of the Internet for global demand-and-supply processes and the international franchising arrangement for local responsiveness. The essence of franchising lies in managing the good relationship between the franchisor and the franchisee. This paper shows e-business strategy plays an important role in growing and nurturing such a good relationship. Specifically, the authors discuss: managing the franchisor/franchisee relationship, harnessing the e-business strategy, aligning the e-business strategy with application service providers, and an attention-based framework for franchisee training.
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Franchising: Developing The Franchisor/Franchisee Relationship

Franchising is “a business opportunity by which the owner (producer or distributor) of a service or a trademarked product grants exclusive rights to an individual for the local distribution and/or sale of the service or product, and in return receives a payment or royalty and conformance to quality standards. The individual or business granting the business rights is called the franchisor, and the individual or business granted the right to operate in accordance with the chosen method to produce or sell the product or service is called the franchisee” (Justis & Judd, 2002, pp. 1-3). Developing a good franchisor/franchisee relationship is the key for a successful franchise (Justis & Judd, 2002). Figure 1 describes how to develop a good franchisor/franchisee relationship. The franchisor needs to learn continuously for the growth of the franchise. The learning process is developed through five stages (Justis & Judd, 2002): (1) Beginner – learning how to do it; (2) Novice – practicing doing it; (3) Advanced – doing it; (4) Master – teaching others to do it; and (5) Professional – becoming the best that you can be. Once reaching the Advanced stage, most preceding struggles have been overcome. However, further challenges will arise as the franchise continues growing, especially in the global markets. This is especially true once the system reaches the “Professional” stage, where various unpredicted and intricate problems could arise. Bud Hadfield (1995, p. 156), the founder of Kwik Kopy franchise and the International Center of Entrepreneurial Development, aptly stated: “The more the company grows, the more it will be tested.” To capture the learning process, a counter-clockwise round dashed arrow surrounding the franchisor is used to depict the increasing intensity of learning as the franchisor continues to grow.

Figure 1.

Understanding how to develop the franchisor/franchisee relationship

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