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Strategic participation and local assets: key drivers of franchise performance in an emerging market

Abstract:

A substantial corpus of research has been dedicated to examining the factors that determine the performance of franchise systems. Previous research has placed greater emphasis on the performance of individual franchise units, thereby relegating the franchisee to a passive role within the franchise system. However, the role of franchisee participation in decision-making processes and the impact of local assets within franchising networks on the effective functioning and success of franchise systems, particularly in emerging markets, have not been fully elucidated. This study investigates the impact of such factors on franchise system in Brazil, a key emerging market, and uses data gathered from 202 franchisor networks. Utilizing the synergistic embeddedness theory of franchise management and employing nonparametric methods, the study’s findings reveal that franchisees with greater local assets tend to have higher performance. In addition, the results also indicate that greater franchisee participation in decision-making processes significantly enhances franchise system performance.