Single-unit versus multi-unit franchising in the United States fast-food industry: A comparative analysis from the franchise perspective

This study examines multi-unit franchising in the domestic fast-food industry from the franchisee\u27s perspective by comparing it to single-unit franchising, and assessing the advantages of a multi-unit approach. The data were obtained in retrospective surveys. Two control groups\u27 prospective perceptions were used to validate the retrospective data. This study represents a first attempt to integrate some previously unrelated aspects of franchising research from different disciplines. The major findings are as follows. Franchisees appeared to respond favorably to the survey as it seems to represent one of the few outlets for franchisees to have their voices heard. Of course, this might have introduced a bias towards those franchisees who are more outspoken than others. Further, retrospective data seem largely to be as good as prospective data in a franchisee context. Multi-unit and single-unit franchisees do not seem to be much different from each other with respect to the reasons they became franchisees, except for the naivete with which they approach their decision, and some indication that single operators have less of an investment motivation than larger operators. Naivete was found to be common to single-unit operators and area developers, as no significant differences were found between the two groups when it comes to experience levels before entry into the system, expectations of scale efficiencies, expected participation in the decision making process, and expected profitability. With regards to the comparison of sequential multi-unit franchisees and area developers, it was expected that sequential operators would show a more entrepreneurial motivation, while area developers would be more hands-off, investor types. Supporting this are the findings that sequential operators see more opportunity to disseminate information within their own systems and have greater confidence in their own expertise. Contrary to the described expectations, however, are the findings that there are no differences in entrepreneurial and in investment motivation. Some indication was detected that the percentage of personal wealth invested might play a role in some of the differences between franchisees