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52319567 Franchise Business Strategies Expansion

52319567 Franchise Business Strategies Expansion

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Published by: eaharri on Jun 21, 2013
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06/21/2013

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³A Futuristic Research Agenda For The Field Of Franchising´  Abstract 
The author of this article is Rajiv P. Dant. The author mainly reviews and summarizesthe franchising system from the North American perspective. The author focuses on the quick changes taking place in the North American franchising system and suggest the researchers toadopt new methods of investigation in the field of franchising. He also suggests theresearchers to go beyond the North American context for data and original theoreticaldevelopment and also to investigate new phenomenon related to franchising.
 I 
ntroduction
Franchising, an American invention, offers an exclusive set of benefits to theentrepreneurial activity. According to the article, it is an association in which franchiseeentrepreneurs collaborate with their franchisor entrepreneurs to create economic value chain(Dant, Perrigot, and Cliquet 2006). It has further mentioned that, no doubt franchising is oneof the world¶s fastest growing retailing, most of the franchising research is focused on singlecountry investigation (that is United States). According to the article, modern franchising wasinvented in U.S. and forms one of the biggest component of U.S. economy. It explains thisfact using data taken from world franchise council. The article states that, in United States,currently there are over 1500 franchising chains, with more than 7,60,000 franchisees andemploying more than 18 million people. Approximately 10 percent of the U.S. private sector economy is generated from franchising related business (Dant, Perrigot, and Cliquet 2006;Reynolds 2004). Mr. Rajiv has further explained this theory with the example of fast foodindustry in United States. U.S. court upheld, that the legitimate owners are the franchisors,rather than franchisees. According to this article, franchising is one-sided investigation i.e.from the franchisors point of view. The article further explains this theory with the use of facts and figures. It has also commented on the cross cultural application of this theory. Theauthor advises to go beyond the context of North America to investigate the developmentalstage of franchising.
 
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The article also reflects on the DARK SIDE of the long term relationship of the partners in franchising. The article further mentions the absence of investigating thefranchising phenomenon from the customers perspective. Further, the author has alsoexplained the inverse relationship between autonomy and dependence in the franchiseindustry. Overall, the article focuses on the international aspects of franchising, structures andstrategies of franchising, and cross culture evaluation of franchising.
 Review
In this article, author Rajiv P. Dant discusses on various theories relating tofranchising that are questioned. The etic-oriented franchising theory (Niblo and Jackson2004; Berry 1969), about the cross cultural and emic generalizability was questioned.Ownership redirection theory (Lafontaine 1993; Gallini and Lutz 1992), and resourceconstraints theory (Oxenfeldt and Kelly 1968; Pfeffer and Salancik 1978), were phenomenologically questioned.According to the author, the concept of franchising is an American invention, whichoffers various benefits to the entrepreneurs involved in the franchising chain (i.e. thefranchisee±entrepreneurs and the franchisor±entrepreneur). He puts forth that, althoughfranchising is world¶s fastest growing form of retailing (Dant, Kacker, Coughlan, andEmerson 2007), the franchising research has not been focused worldwide. Most of thefranchising research has been focused on single-country investigations, i.e. the United States.As mentioned in the article, franchising, being the biggest component of the U.S. economy,employs 1/7
th
of labour force of the country, amounting to more than $500 billion of the U.S. private sector payroll. This huge labour force helps generating excess economic output of $1.53 trillion or approx 10% of U.S. private-sector economy (Dant, Perrigot, and Cliquet2006; Reynolds 2004).Most of the research investigation in the field of franchising is done on the fast foodindustry. As put by Mr. Rajiv, franchisors are the owners rather than franchisees in thefranchise businesses. Therefore, franchising is based on investigation of franchisors. Theauthor says that it is important for the researchers to ask the basic questions relating tofranchising. The basic questions can be:
 
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(1)
 
Does the rules of agency theory (Jensen and Meckling 1976) or the resourceconstraints theory (Oxenfeldt and Kelly 1968; Pfeffer and Salancik 1978) apply todifferent cultures of the countries like Iraq, Israel, Russia, China, or India;(2)
 
Can the franchising pattern of North American fast-food industry be comfortablyimplemented to other franchising sectors like construction, banking, or manufacturing;(3)
 
Do the franchisees and the franchisors have same view regarding the benefits andfailure of franchise?Currently, there is no specific answer to these questions. The general answer isµWe just don¶t know¶.The author has further discussed that, in the context of franchising industry UnitedStates is speedily approaching its maturity state. Therefore, this could be the important reasonfor examining franchising phenomenon beyond the North American contexts where a number of controversial issues still continuous to be dominant due to lack of developed legal systemrelated to franchising. Countries in which the franchising system is still in its developmentalstage, cultural imperatives proves to be the barrier in the franchisor-franchisee relationship.Citing the example of ownership redirection that followed in Spain franchising industry andthe United States franchising industry approaching maturity, the author suggests theresearchers to go beyond the North American context of franchising for investigation. Inother words, the author suggests the researchers to go beyond the North American context of investigation if they want to study the early stage of franchising (i.e. evolutionary or developmental stage).Further the article ventures into examining the different phenomenon formulated byvarious authors to explain the new theoretical frameworks of ownership redirection from the perspective of property rights (Windsperger and Dant 2006; Baker and Hubbard 2004;Maness 1996; Hart 1995; Hart and Moore 1990). According to Mr. Rajiv, authors are beginning to examine research questions by comparing the different theories rather thanconfining single theoretical frameworks, for example: the strong inference test (Barnes 1977;Bloor 1976) of ownership redirection thesis against signalling theory (Lafontaine 1993;Gallini and Lutz 1992), and resource constraints theory (Oxenfeldt and Kelly 1968; Pfeffer and Salancik 1978). The tapered integration or plural forms framework (Bradach and Eccles1989; Harrigan 1984) against each other (cf., Dant and Kaufmann 2003).

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