Franchising as an alternative form of outsourcing : länsförsäkringar Stockholm’s opportunities to expand the franchise concept by including home insurance inspections

Sammanfattning: Through the years at the market Länsförsäkringar has built up an organization with a strong brand, great economy and a good customer base, which create a great starting point to build up a franchise chain from. Today there are also two well-developed and successful franchise organizations within insurance and real estate agency. On this basis, there is possibility for Länsförsäkringar to consider if an advantageous future development could be to develop the franchise concept. Since each regional company within Länsförsäkringar has its own operations, the arrangement of the performance of the services that Länsförsäkringar offers is designed differently in different regional companies. Home inspection is an example of a service performed in various ways in different regional companies. Some regional companies choose to outsource all home inspections, while others choose to perform all home inspections in-house. Länsförsäkringar Stockholm is an example of a regional company that has selected a combination of these two performances. Home inspections can largely be seen as a service that is closely linked to one of Länsförsäkringar's core businesses - insurance. When Länsförsäkringar should insure a house it wants to conduct a home inspection to be aware of the object's current state. This information creates a basis for to which degree Länsförsäkringar chooses to insure the house. At the same time damage prevention can be done since the home owner becomes aware of the object's shortcomings and risks. When the home inspection within Länsförsäkringar Stockholm is outsourced, it is difficult to fully take advantage of all the information and the exchange that the inspection could give. Through a performance of the home inspection under a franchise concept, it is also possible for Länsförsäkringar to take the opportunity to create customer relationships and build brand. The aim of this study is to provide theoretical explanations for Länsförsäkringar Stockholm’s opportunities to expand the franchise concept by including home inspections. In particular, the study examines whether the current franchisees are interested in broadening the franchise concept with additional services. The theoretical starting point for the study is the Transaction Cost Theory and the Agency Theory, which form the basis for the formulation of a number of hypotheses which become tested empirically. Through a web-based questionnaire, which is sent out to the 103 franchisees within insurance, quantitative data is collected. The result of the study shows that there is a demand among today's franchisees to expand the current range with additional services. For those franchisees home inspection is considered to be the most attractive service. The franchisees do not perceive any significant uncertainty about the future. However, they perceive that an expanded franchise concept would be very positive if it contributes to a creation of interdependence between the parties for a future cooperation. Whether an expanded franchise concept would lead to a creation of interdependence between the parties is, however, linked to what type of service that the franchise concept would be expanded with. If it becomes expanded with home inspection the franchisees would have to do extensive transaction-specific investments. Within Länsförsäkringar Stockholm, and several other regional companies, a large part of the knowledge of home inspection already exists, which gives Länsförsäkringar a superior position of control. This study shows that a combination between franchise autonomy and relational forms of governance would be preferable for Länsförsäkringar to create the greatest possible growth in the long term for Länsförsäkringar and the entire franchise chain.