Franchising in the US remodelling market: growth opportunities and barriers faced by general contractors

Benjamin Murray and Hedley Smyth

Construction Management and Economics, 2011, vol. 29, issue 6, 623-634

Abstract: Residential remodelling contractors operate in a highly fragmented, disaggregated market. Competition and consolidation arise from other market actors, thus remodellers have diminished bargaining power and higher market risk since they traditionally service geographically specific markets. Franchising theories may provide a competitive business strategy to parallel consolidation in other actors. Yet a small population of remodelling franchises are listed in the US. The vast majority of these franchises were in specialty trades and only one general contracting franchise was represented. This raises the question as to what extent there are barriers to franchising in practice for general contractors in the US remodelling industry and whether opportunities exist for growth through franchising. First, economic theories of franchising are evaluated against secondary quantitative data and extant literature. Second, interviews were conducted among non-franchising, general remodellers. Two principal findings emerge. Human capital requirements are found to be a primary barrier to franchising. A second finding is the perceptual barrier among key decision-makers in founder-controlled firms. Therefore, the barriers are largely perceptual. The finding is reflected upon by introducing upper-echelon theory and ultimately suggests that as the profiles of company owners change, the perceptual barrier to franchising may be of lesser significance.

Keywords: Barriers to entry; franchising; general contractor; remodelling (search for similar items in EconPapers)
Date: 2011
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/01446193.2011.566622 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:conmgt:v:29:y:2011:i:6:p:623-634

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RCME20

DOI: 10.1080/01446193.2011.566622

Access Statistics for this article

Construction Management and Economics is currently edited by Will Hughes

More articles in Construction Management and Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().