Factors influencing relationship development in franchise partnerships

Abstract

PurposeThis paper aims to identify and evaluate the factors which influence relationship development between franchisors and franchisees in international service franchise partnerships.Design/methodology/approachCase studies of two international hotel firms were the focus of the enquiry. Interviews and document analysis were used as the data collection techniques.FindingsFindings demonstrate that role performance, asset specificity and cultural sensitivity influence relationship development in franchise partnerships. The influence of these factors, however, varies in different forms of franchise partnerships, namely individual and master franchises.Research limitations/implicationsThe findings are based on case studies in the international hotel industry and therefore may not be generalizable to other industry sectors.Practical implicationsService firms should adopt a systematic organization‐wide approach to, and management of, relationship development in franchise partnerships. In particular, in the case of cross‐country partnerships, both franchisors and franchisees need to develop and exploit their inter‐cultural skills and adapt their business practices to the cultures of host and home countries where appropriate.Originality/valueThe paper exploits three main streams of research which could inform the antecedents of business‐to‐business relationships, namely power‐dependence, transaction cost theories and international business. It thus advances services marketing and more specifically international franchising literatures by offering a holistic theoretical perspective to our understanding of business‐to‐business relationship development.