"Relational therapy" for retail franchisers and franchisees: staging into the experience economy

T.L.J. Broekhuizen and E.P.M. Croonen
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E.P.M. Croonen: Groningen University

No 02B69, Research Report from University of Groningen, Research Institute SOM (Systems, Organisations and Management)

Abstract: Retail franchisers struggle to differentiate their businesses in an increasingly commoditizing environment. In order to differentiate, these retailers have to adjust their processes and offerings, but this may harm the franchiser’s unified concept and lead to more opportunistic behavior of the franchisees. We believe that staging experiences may solve these problems for certain retail franchisers. This paper has two main objectives. The first objective is to provide some “relational therapy” for franchisers and franchisees that are struggling with the paradox of differentiating their businesses in a highly commoditized environment in spite of the standardized franchise settings. The second aim is to solve the paradox of keeping the commitment of the franchisees high and controlling the risk of opportunistic behavior by punishing defective franchisees. As a result, franchisers and franchisees must find a balance between dealing with internal conflicts and creating customer value. By using a comprehensive research model that takes into account the “ménage à trois” between franchiser, franchisee and customer, instead of dual relationships, the second paradox is untangled. Finally, we address the limitations of the concept and future directions are outlined.

Date: 2002
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