The challenge of autonomy and dependence in franchised channels of distribution

Art enduring challenge for franchise management involves the reconciliation of (1) the franchisor's desire for standardization, consistency, and control for the preservation of its goodwill and brand equity, and (2) the franchisee's quest for autonomy, especially because franchises are frequently sold on the platform of be your own boss and have historically attracted would-be franchisees with self-employment histories and strong streaks of independence and autonomy. Building on arguments derived from agency theory, resource dependence theory, the locus of control argument, and the countervailing power premise, the present study attempts to evaluate (I) the interrelationships between the concepts of autonomy and dependence, and (2) the influence of competition, success, experience, and multi-unit ownership as determinants of the various autonomy-dependence perceptions. It is suggested that, contrary to the dominant perspective nested in the markets versus hierarchy dichotomy, which portrays the sentiments of dependence and autonomy as opposing theoretical variables (i.e., they are envisioned to exist only in high-low combinations of these two constructs), even their high-high and low-low combinations can emerge within a franchise setting and that these diverse behavioral settings entail unique management challenges. The empirical portion of the study utilizes data drawn from the franchised channel of fastfood restaurants. The results support the emergence of all four combinations of dependence and autonomy (i.e., the traditional high-low combinations as well as the high-high and low-low combinations), suggesting that behavioral settings of franchises are indeed richer than hitherto imagined It appears that because franchisee-franchisor relationships encompass several domains, they each feel dependent on the other parry in certain domains, and simultaneously autonomous in other domains. The environmental factor of competition, the relationship factor of business success experienced in the franchise system, and the structural factor of multi-unit ownership emerged as significant predictor of dependence and autonomy. Notably, however, the countervailing power argument was not supported by the data. The multi-unit ownership effects were especially strong and provided a more direct test of the alignment of goals and incentives envisioned by agency theory. We conclude by identifying four categories of franchisees with distinct gestalts that franchisors would do well to learn to manage in the spirit of portfolio management. (C) 1998 Elsevier Science Inc.