Rozenn Perrigot, Guy Basset and Brinja Meiseberg
The purpose of this paper is to offer a novel perspective on resale pricing in franchising, i.e. from a franchisee perspective, by combining legal and managerial considerations in…
Abstract
Purpose
The purpose of this paper is to offer a novel perspective on resale pricing in franchising, i.e. from a franchisee perspective, by combining legal and managerial considerations in the European context. The objective is to assess franchisee perceptions regarding resale pricing in their chains.
Design/methodology/approach
The authors adopt a qualitative approach and use 46 in-depth interviews with franchisees covering retail and service industries in the French market.
Findings
Many of the interviewed franchisees believe that joining a franchise chain involves respecting the recommended resale prices. For some of the franchisees, in link with the chain uniformity, imposing uniform resale prices throughout the chain represents a strength, because customers who visit different stores within the franchise chain expect to find consistent pricing. Moreover, many franchisees consider that their franchisors have some know-how that they use to set correct resale prices, taking into account the profit margin.
Research limitations/implications
This research contributes to the literature on resale pricing in franchising, as well as the franchising literature in general, by combining legal and managerial considerations, adopting a franchisee perspective, covering retail and service industries and focusing on French and European markets.
Practical implications
This research can be viewed by franchise experts, franchisors, franchisees and franchisee candidates as a synthesis of resale price-related legal aspects, adopted practices and potential conflicts in franchise chains in the French market. It also highlights price-related practices to be avoided to prevent potential conflicts.
Originality/value
The subject of resale pricing in franchise chains is a hot topic, because of its link with customer attraction, chain uniformity, franchisor know-how, franchisee autonomy and the legal dimension.
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Rozenn Perrigot, Begoña López-Fernández, Guy Basset and Olivier Herrbach
As franchisees are independent entrepreneurs, one important part of the business format that franchisors are not allowed to impose on their franchisees is resale prices. They are…
Abstract
Purpose
As franchisees are independent entrepreneurs, one important part of the business format that franchisors are not allowed to impose on their franchisees is resale prices. They are only allowed to indicate a recommended or a maximum price. This study aims to look further into the capabilities underlying the calculation of resale prices and suggests that price-setting is part of both the “business know-how” transferred to franchisees and the “organizational know-how,” that is, capabilities developed and kept at the franchisor level.
Design/methodology/approach
This study adopted a qualitative methodology with a total of 65 interviews, 19 with franchisors and 46 with franchisees, all operating in the French market.
Findings
The findings show that resale pricing is a process that involves know-how. The complexity of pricing leads to develop specialized and broad capabilities. The first type of know-how, i.e., business know-how transferred to franchisees, deals with operational implementation of recommended resale prices in the stores. The second type, i.e., organizational know-how, not transferred as a safeguard against opportunism, connects across other functions of the franchise chain such as R&D and communication.
Originality/value
This study confirms the existence and relevance of another kind of know-how apart from the business know-how that is transferred to the franchisees. Organizational know-how at the chain level, though often neglected, is a necessary determinant of sustaining a competitive advantage. This know-how is not transferred to the franchisees but contributes to the success and sustainability of the franchisor/franchisee relationship. Franchisors should thus work on improving their capabilities to better support their franchisees. Moreover, this study highlight the complexity and extreme importance of setting the right resale price.
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Guy Basset and Rozenn Perrigot
The subject of resale pricing is a hot topic in franchising, due to its links with chain homogeneity and franchisee autonomy. The franchisee is bound by current legislation and…
Abstract
Purpose
The subject of resale pricing is a hot topic in franchising, due to its links with chain homogeneity and franchisee autonomy. The franchisee is bound by current legislation and regulations, in addition to respecting the franchise contract clauses, to the extent that they are lawful, and potentially opposing contentious professional practices. Focusing on resale prices, we cover these three perspectives, that is, legal, contractual, and professional constraints, using a dual approach based on managerial and legal perspectives and illustrating our arguments using examples from European and French cases.
Methodology/approach
We illustrate our arguments using examples from European and French cases.
Findings
We pointed out that the ban on the practice of imposed resale prices presents several advantages (e.g., integrity of franchise chains, chain’s commercial dynamism).
Research limitations/implications
Our paper contributes to the stream of franchising literature dealing with resale prices.
Practical implications
Our paper can be viewed by franchisors, franchise experts, franchisees, and franchisee candidates as a synthesis of the impact of European and French regulations on resale price-based practices to be adopted in franchise chains. It also highlights practices to be avoided in order to prevent potential conflicts.
Originality/value
We use a dual approach based on managerial and legal perspectives to explore resale prices in the context of franchising.
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Guy Basset, Rozenn Perrigot and Gerard Cliquet
In this chapter, using a dual approach based on managerial and legal perspectives, we examine franchisee attitudes regarding online sales in franchise networks to better…
Abstract
In this chapter, using a dual approach based on managerial and legal perspectives, we examine franchisee attitudes regarding online sales in franchise networks to better understand their views of the costs and benefits of e-commerce in a franchise network. We thus explore the following research questions from a franchisee perspective: What are franchisees’ attitudes regarding online sales?; Are online sales viewed as complementary or competing sales for physical stores?; What about the opening of a franchisor’s website?; and What about the opening of a franchisee’s website? We also analyze how several different e-commerce options available to franchisors impact franchisee incentives and how they would be treated under European Union competition law.
The empirical research is based on the conduction and analysis of 46 in-depth interviews with franchisees in the retail and service industries in the French market.
We find that online sales in franchise networks raise important questions for the franchisees, and for the franchisors as well. E-commerce has to be integrated into the development strategies of franchise networks. Franchisors should facilitate the online sales practices of their franchisees in order to avoid potential conflicts with them or among the franchisees themselves, thereby maintaining the control necessary to ensure healthy network growth. Moreover, franchisors should pay attention to the sharing of Internet sales with its franchisees.
Our chapter contributes to the stream of franchising literature dealing with the use of Internet in franchise networks. Moreover, it can be viewed by franchisors, franchise experts, franchisees, and franchisee candidates as an overview of issues linked to online sales in franchise networks. It also highlights best practices when having a multichannel strategy.
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Rozenn Perrigot, Guy Basset and Gérard Cliquet
The purpose of this paper is to highlight the various means of communication available to franchisors in attracting prospective franchisees more effectively than their…
Abstract
Purpose
The purpose of this paper is to highlight the various means of communication available to franchisors in attracting prospective franchisees more effectively than their competitors. In addition, it explores the potential use of Web 2.0 resources by franchisors.
Design/methodology/approach
The simultaneous use of various means of communication by franchisors is examined through a case study. The authors have chosen one of the largest franchised chains in the world, which is in the process of expanding its chain of restaurants in many countries, with France being heavily targeted: Subway.
Findings
This case study reveals the complementarities of push communication, pull communication, and communication relayed by influencers, along with the development of new means of communication through the use of Web 2.0 tools (Facebook, LinkedIn, YouTube, etc.).
Research limitations/implications
This paper contributes to the stream of franchising and hospitality management literature. The limitations encountered stem mainly from the case study methodology.
Practical implications
The implications of this research for franchisors relate primarily to the means of communication used in order to appear more attractive in the eyes of potential franchisees. This paper also provides prospective franchisees with a list of sources available to collect useful information in selecting the best‐suited franchised chain to join.
Originality/value
Few papers have assessed the way new franchisees are attracted from a franchisor's perspective. The study of franchisor communication strategy and franchisor use of Web 2.0 resources to bring in new franchisees is indeed original, in comparison with the existing literature.
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Rozenn Perrigot, Guy Basset, Danièle Briand and Gérard Cliquet
Network uniformity is crucial in franchising, but an excessive number of imposed constraints to maintain this uniformity jeopardizes a franchisee’s independence and too much…
Abstract
Purpose
Network uniformity is crucial in franchising, but an excessive number of imposed constraints to maintain this uniformity jeopardizes a franchisee’s independence and too much independence given to franchisees jeopardizes franchise network uniformity. So, how to find an equilibrium and avoid the reclassification of a franchise contract as a branch manager contract or as an employment contract with all its related consequences? The paper aims to discuss these issues.
Design/methodology/approach
The research is based on a multiple cases approach. The four complementary cases deal with Yves Rocher (cosmetics and body/face care), Bata (shoes), Fiventis (real estate, life insurance and tax-sheltered savings products), and France Acheminement (express transportation), all analyzed in the French context.
Findings
A franchise contract can be reclassified as a branch manager contract if there is economic dependence or as an employment contract if there is a legal subordination relationship. These reclassifications have not only financial consequences, but also an impact in terms of image.
Research limitations/implications
The research is based on secondary data. Collecting data along with interviews of franchisors and franchisees would be beneficial.
Practical implications
The research is of specific interest to franchisors, franchise experts and lawyers in terms of minimizing the possible risks of facing such types of reclassification of franchise contracts. It can also inform franchisees who may be running their businesses under such conditions.
Originality/value
This paper uses a business and law approach in order to analyze the paradox of network uniformity and franchisee autonomy and raises the question of “how to find equilibrium?”
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This article aims to review the latest management developments across the globe and pinpoint practical implications from cutting‐edge research and case studies.
Abstract
Purpose
This article aims to review the latest management developments across the globe and pinpoint practical implications from cutting‐edge research and case studies.
Design/methodology/approach
The briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.
Findings
Any organizations aiming to seek a competitive advantage and/or to reach a larger audience will be keen to exploit new possibilities that technological progress opens up to them. The origins of social media might well lie in the “simple” aim of creating a communications tool among friends, but these soon brought other opportunities. However, the extent to which the Web 2.0 era has provided a return for companies and organizations seeking to exploit it remains open to debate.
Practical implications
The article provides strategic insights and practical thinking that have influenced some of the world's leading organizations.
Originality/value
The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy‐to‐digest format.