Drivers of performance of franchisees: A multi-level analysis

Abstract

The aim of this study is to examine the drivers of performance of franchisee organizations. Adopting agency theory, we hypothesize that age, size, obligatory assortment decided by central franchisors, distribution of power from franchisors to franchisees, frequency of franchisor’s visit to franchisee are positively associated with the performance of franchisees. The survey data at 186 franchisees in four European countries are used to test the proposed hypotheses. Principal component analysis and hierarchical linear model are applied in this study. Empirical results reveal that whether the proposed hypotheses are statistically supported depending correspondingly on how franchisees’ performance is measured. The paper provides some implications to franchisee literature.