Organizational form and efficiency of franchise chains

Isabelle Piot-Lepetit (), Rozenn Perrigot () and Gérard Cliquet ()
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Isabelle Piot-Lepetit: UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier
Rozenn Perrigot: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique
Gérard Cliquet: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: Purpose - The purpose of this paper is to develop a new model allowing the implementation of a benchmarking process that jointly measure the efficiency of franchise chains and determine their optimal organizational form. Design/methodology/approach - The methodology is based on a non-econometric technique developed by management scientists on economic concepts for evaluating the performance of decision-making units and implementing a benchmarking process. An extended model is developed in the paper for evaluating the efficiency and determining the optimal percentage of company-owned outlets (PCO) of each franchise chain. Findings - First, results showed that the PCO has a positive impact on franchise chain efficiency; even if other chain characteristics have a larger impact. Second, the optimization of the PCO allows for additional improvements in efficiency. Research limitations/implications - Even though this study has some limitations (e.g. sample and variable selection), it contributes to the literature on franchising by providing an approach allowing us to answer to the question of Shane (1998) on the optimal proportion of franchised units given other firm characteristics. Practical implications - By developing a model that allows for the joint evaluation of franchise chain efficiency and optimal PCO, this study offers to franchisors a new benchmarking process allowing for both a competitive and functional benchmarking. Originality/value - The originality of this research can be found in the new model developed for allowing a benchmarking of franchise chains that allows an evaluation of efficiency jointly with a determination of their optimal organizational form.

Keywords: Performance; Efficiency; Data envelopment analysis; Franchising; PCO; Plural form (search for similar items in EconPapers)
Date: 2014
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01023719v1
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Citations: View citations in EconPapers (3)

Published in International Journal of Retail and Distribution Management, 2014, 42 (7), pp.671-684. ⟨10.1108/IJRDM-04-2013-0089⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01023719

DOI: 10.1108/IJRDM-04-2013-0089

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