Elaboration of a Franchising Strategy - The Strategy Behind the Choice of a Franchising Agreement

Sammanfattning: While substantial research has taken place on the antecedents of franchising, very little research has looked at the finer details of how franchising actually takes place. The aim of this thesis is to bridge this gap by identifying the types of franchising agreements that are used and the factors that lead to the choice of a specific franchising agreement by a franchisor. I found that the companies studied did not restrict themselves to the usual franchising agreements, instead choosing to tailor these agreements to their situation. Franchising agreements that are traditionally used mostly look at the size of the franchise and at the rights of the franchisee. This study found that companies customize franchising agreements by also considering the role they will play in the financing of the franchise. The interviewees helped identify a certain number of factors that had an impact on whether an outlet would be company-owned or franchised, as well as on the type of franchising agreement used. I found that the factors that affected the two companies' decisions were closely linked to the three main theories on the antecedents of franchising (resource scarcity, agency theory and plural form). However, there were slight difference in terms of the factors considered by the two companies. Although this thesis did not try to compare the two companies, my hypothesis is that the differences in terms of factors affecting the type of franchising agreement chosen came from the different stages of the business cycle at which the two companies were.