Who Really Wears The Pants Seminar

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Slides from a presentation on who has the power in a franchise relationship. Griffith University, Brisbane, Australia.

Slides from a presentation on who has the power in a franchise relationship. Griffith University, Brisbane, Australia.

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  • 1. Franchisor vs Franchisee Who really wears the pants? Professor Lorelle Frazer Griffith University Jason Gehrke Franchise Advisory Centre
  • 2. Research about franchising conflict
    • Sponsored by the ACCC and Griffith University
      • Research team: Frazer, Weaven, Wright
    • Preliminary study to explore issues
      • Power, control, conflict
    • Interviewed 15 franchising sector ‘experts’
  • 3. Participants
    • 3 x consultants
    • 1 x accountant
    • 3 x lawyers
    • 1 x corporate lawyer
    • 1x broker
    • 2 x franchisors
    • 3 x franchisees
    • 1 x master franchisee
  • 4. Themes we explored
    • Who holds the power?
    • Are franchisor / franchisee goals in alignment?
    • Is franchising a ‘partnership’ arrangement?
    • Main causes of conflict
  • 5. What we found
  • 6. Who wears the pants?
    • Depends
      • On the success of the franchisee
      • On the stage of the franchising relationship
      • On the ‘size’ of the franchisee’s holdings
  • 7. Nature of power
    • Perception
      • Each side thinks the other has the power
    • Reality
      • Agreements are written in franchisor’s favour
  • 8. Alignment of goals
    • Franchisor goals
      • To grow the network
      • To maximise sales
      • To make a profit when they sell the business
    • Franchisee goals
      • To maximise profits
      • To achieve a desired lifestyle
  • 9. Nature of the relationship
    • Partnership
    • Employer-employee
    • Master-servant
    • Commercial marriage
    • Contractual relationship
  • 10. What causes conflict?
    • Poor performance of franchisee’s business
    • Poor communication
    • Change
    • Fear mongering by franchisees
    • Third party interference
    • Disagreements about marketing
  • 11. The role of the founder
    • A reason why some people join franchises
    • Founder’s role changes over time
    • Replaced by ‘Head Office’
    • Franchisor arrogance
  • 12. “ This would be a great business if I didn’t have to put up with the franchisees”
  • 13. Franchisee selection is the key
    • Have you ever heard the following?
  • 14. I’m not suitable for franchising.
  • 15. Franchisor’s responsibility Put your golf clubs away. You won’t be needing them for the next 5 years.
  • 16. Definitions
    • Ability to influence the behaviour of others;
    • A function of dependency (importance, non-subsitituability, scarcity )
    • Ability to influence the allocation of resources;
    Source: Macquarie Dictionary
  • 17. 5 Bases of Power
    • Coercive Power – based on fear;
    • Reward Power – based on the ability to distribute rewards that others view as valuable;
    • Legitimate Power – based on position of authority;
    • Expert Power – based on special skills or knowledge;
    • Referent Power – based on desirable resources or traits;
    • French & Raven
  • 18. Role model Role model Referent Product/service innovation; Practical experience; market knowledge; Brand implementer Incompetence; Product/service innovation Expert Franchising Code; TPA; Franchise agreement; Brand owner; Legitimate Financial; Reference, FAC Awards; Royalty scale; Concessions; Renewal; multi-sites; Reward Media; Association; Royalties Termination; Supply Coercive Franchisee Franchisor
  • 19.  
  • 20. Franchise Population & Power Power per franchisee Total franchisees
  • 21. A model of franchise power over time Copyright, Jason Gehrke 2007 Franchisor Franchisee Established, Growing Mature New
  • 22. Franchising at Griffith University
    • Teach franchising courses at undergraduate and postgraduate level
    • Members of franchising sector eligible to study
    • Staff have PhDs in franchising
    • Currently 7 franchising PhDs enrolled
    • Franchising Australia surveys
    • Government funded research
  • 23. Path to an MBA
    • Franchising course at Griffith (July 2002);
    • Postgraduate Diploma (4);
    • Graduate Certificate (+4);
    • Master of Business Administration (MBA) (+3)