Towards a network perspective of franchising chains

Franchising, especially business format franchising also known as the McDonalds approach has been seen by practitioners and also by some academics simply as a straightforward approach for the creation (and replication) of one’s own business – i.e. as one of the ways for entrepreneurship (and growth). Several trade associations were created for the promotion of this kind of business using a combination of “recipes for success” and entrepreneurial “bias for action”. The prevailing explanations for the franchising phenomena, especially the initiative of franchising, the propensity to franchise, and franchise performance, are mostly based on two orders of reasons or a combination of them: franchising as a means to deal with resource scarcity and / or mechanism for franchisor and franchisee to align incentives between both. However, empirical studies have shown limited support for such claims, especially in face of the so called plural form. The mixed nature of the plural form, where proprietary units coexist with franchised units, seems to contradict predictions of a clear deterministic path in one or the other direction. Issued regarding learning processes in such “networks” have recently been brought in, as an attempt to capture other mechanisms that may underlie their operation and sustainability. It may also be argued that the traditional literature on franchising has assumed a high level of homogeneity within and between franchising “networks”, possibly due to the perception that they tend to be “dominated” by a high level of standardization of practices, both operative and relational. This paper seeks to explore another perspective to look at franchising “networks”, by drawing from the literature on capabilities and industrial networks. Seen from this perspective, business format franchising may involve more than the mere replication or exploitation of a recipe, especially if we take into consideration the partly idiosyncratic nature of both the relationships between actors and their capabilities and intentions. In this framework, the experiences of the actors involved and not only the franchisor, including those relative to relationships as mechanisms for the coordination and generation of new knowledge, may be relevant for a better understanding of the dynamics of a particular “network”. Additional sources of variety may be the need throughout time for the refinement of the “package”, in more than one ways, together with the gradual developing of the network, and the learning experiences taking place in that context.