Information Technology in Franchising

Information Technology in Franchising

Ye-Sho Chen (Louisiana State University, USA), Grace Hua (Louisiana State University, USA) and Bob Justis (Louisiana State University, USA)
DOI: 10.4018/978-1-60566-026-4.ch317
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Abstract

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) Information technology (IT) has been widely used in today’s businesses. In his best seller, Business @ the Speed of Thought, Bill Gates (1999) wrote: “Information Technology and business are becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without talking about the other.” Thus, to see how IT is used in franchising, one needs to know how franchising really works. The objective of this paper is to propose an attention-based IT infrastructure that can cultivate the relationship building between the franchisors and their franchisees which will ultimately lead to the success of the franchise organizations.
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Background

In addition to the popular growth strategy for many businesses, franchising has emerged over the years as a pathway to wealth creation for entrepreneurs (Justis & Vincent, 2001). This article first discusses the operations at both the franchisor headquarters and the franchisee outlets. Second, it reviews the franchisor/franchisee relationship and points out the essential indicators needed to pertain and flourish the good relationship. Third, it shows the inevitability of collaborative learning and innovation, which leads us to the discussion of the working knowledge development among the franchisor and the fellow franchisees. Fourth, we discuss that the proposed attention-based IT infrastructure will enable the knowledge sharing and dissemination between the franchisor and the franchisee; and suggest outsourcing the initial architectural stages of the IT infrastructure to trusted applications service providers.

Key Terms in this Chapter

Franchisor/Franchisee Relationship Management: The vital factor for the success of a franchise, including: Knowledge, Attitude, Motivation, Individual Behavior, and Group Behavior.

Franchisor/Franchisee Learning Process: The stages of learning, including Beginner, Novice, Advanced, Master, and Professional.

Franchisor: The individual or business who grants the business rights.

Franchisee Life Cycle: The stages a franchisee goes through in the franchise system: Courting, “We”, “Me”, Rebel, Renewal.

Franchisee: The individual or business who receives the business rights and pay the royalties for using the rights.

Franchising: A business opportunity based on granting the business rights and collecting royalties in return.

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