Virtual Communities and Social Networking in Franchising

Virtual Communities and Social Networking in Franchising

Ye-Sho Chen (Louisiana State University, Baton Rouge, USA)
Copyright: © 2018 |Pages: 12
DOI: 10.4018/IJVCSN.2018100103
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Franchising has been a popular approach to growing a business. Its popularity continues to increase, as we witness an emergence of a new business model Netchising or Online-to-Offline, combining the Internet for global demand-and-supply, virtual communities, and social networking processes and the international franchising arrangement for local responsiveness. In this article, we show that building up a good “family” relationship between the franchisor and the franchisee is the real essence of franchising, and proven working knowledge is the foundation of the “family” relationship. Specifically, we discuss the process of how to make big data and business analytics meaningful for virtual communities and social networking in franchising. The process consists of business challenges, data foundation, analytics implementation, insights, execution and measurements, distributed knowledge, and innovation.
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Business Challenges: Managing The Franchisor-Franchisee Relationship

Franchising is “a business opportunity by which the owner … grants exclusive rights to an individual for the local distribution ... The individual or business granting the business rights is called the franchisor, and the individual or business granted the right to operate … is called the franchisee.” (Justis & Judd, 2002, pp. 1-3) Developing a good “family” relationship between the franchisor and the franchisee is the key business challenge of a successful franchise (Justis & Judd, 2002). Figure 1 describes how such a “family” relationship is built in the franchise business community. In the figure, it shows that the franchise system is operated in the dynamic business environment of global, national, regional, and local communities. The resilience of the business environment is also getting significant attention nowadays (UNISDR, 2018). The “family” relationship is developed through a mutual influencing process of family-centric relationship building enabled by virtual communities and social networking.

Figure 1.

Understanding how to manage the franchisor/franchisee relationship


The franchisor’s learning process is incrementally developed through five stages (Justis & Judd, 2002): Beginner – learning how to do it; Novice – practicing doing it; Advanced – doing it; Master – teaching others to do it; and Professional – becoming the best that you can be. Once attaining the advanced stages of development, most preceding struggles have been overcome. However, further convoluted and challenging enquiries will arise as the franchise continues expansion. This is especially true once the system reaches the “Professional” stage, where various unpredicted and intricate problems could arise. To capture the learning process, a counter-clockwise round arrow surrounding the franchisor is used to depict the increasing intensity of learning as the franchisor continues to grow.

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