Motivations and Relations in Business Format Franchise Systems (PDF)

Research Paper (postgraduate) from the year 1998 in the subject Business economics - Business Management, Corporate Governance, grade: 1,0, University of Auckland (Department of Property), language: English, abstract: This study investigates the required business-related qualifications on the part of prospective franchisees of real estate brokerage services as well as the question why they may prefer to buy a business format franchise over running an independent business based on their own experience, expertise, know-how and skills. As for the franchisor perspective, a major focus was put on the management of potential areas of conflict between power and control along the lifecycle of a franchise relationship.

Anecdotal evidence from a convenience sample of three business format franchise systems highlight the importance of intangible indicators for the quality of professional services in customers' decision-making with brand as the driving factor for franchisees' motivation, whereas training especially prior to opening seems to be less crucial than franchise theory suggests. The possibility to blueprint professional services and real estate brokerage services in particular is limited due to the heterogeneity of properties and local market conditions, for instance. Because of divergent economies of scale especially with regard to information technology resources, network effects also play an important role. Both franchisors and franchisees agreed on the significantly increased efficiency of franchise owners compared to branch managers. No major differences have been found in the terms and conditions of the franchise agreements.