NEW APPROACH OF MARKETING REGARDING RELATIONS IN FRANCHISING CHAINS

Dr Izabella Steinerowska-Streb

Karol Adamiecki University in Katowice, Poland streb@ae.katowice.pl

ABSTRACT

Purpose: This paper aims to examine the main aspects of relation-

ship marketing in the sphere of franchising. It is hypothesized that,

nowadays, to achieve competitive advantage of franchising chain,

franchisors should identify, develop and enhance the efficient port-

folio of long-term relationships according to the rules of relationship

marketing.

Design/methodology/approach: The study was based upon primary

and secondary data. The international literature referring to the dis-

cussed topic and accessible results of the direct studies on creation

and support of the relation with clients were used.

Findings: The research results indicate a strong need to implement

the partnership marketing rules to franchisor-franchisee relations.

However franchisees’ motivation for maintaining relationship is

complex, inter-related and various. The most important factors in-

fluencing the long-term relations are effective communication and

information exchange.

2

Originality/value: Although relationship marketing has been stud-

ied for a number of years by many scholars, the sphere of relation-

ship marketing in franchising has not been thoroughly explored.

The paper systemizes the actual knowledge in this field. The pre-

sented research results enable franchise companies to build profit-

able relationship with franchisees by means of applying appropriate

marketing tools.

Keywords: Franchising, Relationship marketing, Relations

1. INTRODUCTION

1.1. THE IDEA OF RELATIONSHIP MARKETING

At the present time the relationship marketing is regarded as

a new paradigm in both the marketing practice and research (Palmer

et. al. 2005, Sheth 2002, Veloutsou et. al. 2002, Grönroos 1994,

Gummesson 1994). It emerged due to shift in focus from customer

acquisition to customer retention (Sheth 2002). The changes in ori-

entation from so-called transaction marketing to relationship-

orientated marketing were based on the following factors (Palmer et.

al. 2005):

• the decline of traditional mass marketing techniques, as cus-

tomers become more discriminating and demanding;

• the saturation of markets as they mature;

• the increasing focus on price, as differentiation decreases;

3

• the appearance of technological developments that provide

new solutions and products;

• the changing nature of markets, particularly the increase in

competition and development of fragmented, regional, and/or

global markets and companies.

It became obvious that the perspective of traditional market-

ing mix was too restrictive and failed to capture the broader com-

plexities inherent within many markets. Therefore marketing per-

spectives such as relationship marketing had to emerge (Harwood

and Garry 2006).

The aim of relationship marketing (partnership marketing) is

to identify, establish, maintain and enhance long term relationships

with customers and other stakeholders. As a result these objectives

of all involved parties are met and followed by a mutual exchange

and fulfilment of promises (Grönroos 1990). Payne (1995) has dis-

tinguish the following rules of relationship marketing:

• Focus on customer retention.

• Emphasis on customer value instead of focusing on

product features.

• Long-time scale rather than a short-time perspective.

• High quality of customer service.

• Active commitment of customer.

• High quality of contact with customer.

• Quality as the concern of whole rather than a matter

of the particular operations.

4

The key differences between traditional marketing and rela-

tionship marketing are shown in table 1.1

Traditional

marketing

Relationship

marketing

Focus

Orientation

Time scale

Service level

Commitment

Customer contact

Quality

Single scale

Product features

Short

Little customer ser-

vice

Limited

Moderate

Concern of produc-

tion

Customer retention

Product benefits

Long

High customer ser-

vice

High

High

Concern of all

Source: Harwood T. G., Garry T. (2006) Relationship marketing: why bother?, Handbook of business strategy, Emerald Group Publishing Limited, 2006, pp. 108 Table 1.1 : Key differences between traditional marketing and rela-

tionship marketing

As shown in Table 1, relationship marketing is built on the

co-operation among a company, its employees and other groups of

stakeholders. Similarly, franchising is based on the partnership

among franchisor, franchisees and suppliers. As the relationship

paradigm is close to the nature of franchising, it seems that all the

roles of relationship marketing may be easily adopted to the fran-

chising chains.

5

1. 2. Relations in franchising chains in the light of relationship

marketing

The partnership marketing is focused on dyadic and multilat-

eral relationships (Eirtz and Wilson 2004). The amount of consid-

ered relations is differentiated. It depends on the type of organization

and it’s environment. The specialists in the area of partnership mar-

keting distinguish from some to several dozen such relationships.

For example, Christopher et. al. (1991) estimate that the firm that

wants to provide the optimum value should built and maintained the

relationships with six markets, including: internal, customer, refer-

ral, supplier, influencer, and employee recruitment markets.

Whereas Gummersson (1994) identifies thirty relations between or-

ganization and its partners, he emphases that, in reality, they appear

concurrently in different constellations.

According to Otto (2004) the particular lists of relationships

are never adequate to all possible situations. Thus, a particular or-

ganization should prepare the individual set of bonds linking it with

its stakeholders. Otto (2004) also suggests that, generally, there can

be four basic categories of relationship such as:

• relations with customers,

• relations with suppliers,

• external relations,

• internal relations.

6

Based on this specification one can enumerate the main types

of relationships existing in the franchising chains. Indeed, such as

Otto (2004) recommends, they can be divided into former mentioned

four groups (Fig. 1.1). Contrary to other organizations in the fran-

chising chains two quite different kinds of relations with customers

have to be distinguished. One set of them are the relations with final

clients who buy products and services. The second - are the relations

with franchisees who buy from franchisor a particular product: a

franchise outlet. This differentiation of relations with customers

makes franchisee organizations unique.

Source: Own elaboration.

Fig. 1.1: The relationships existing in the franchising chains

F R A N C H I S O R

Relations with customers

Relations with final clients

Relations with franchisees Relations with

suppliers

External relations

Internal relations

7

Among all relationships which take place in the franchising

chains the particular role play bonds between franchisor and franchi-

see. Those entities are tied by an agreement which makes them le-

gally independent but economically interdependent (Michael, 2000).

According to the contract, a franchisor sells the right to use the trade

name, operating systems, and product specifications to a franchisee.

The franchisee is permitted to offer franchisor’s product/service un-

der the franchisor’s name within a specified region and time

(Combes and Ketchen 2003).

Noteworthy, in one way those entities are partners at the

business to business level. On the second hand, however, franchisees

are franchisors’ customers as they buy from them a franchise outlet.

This makes the relationship between a franchisor and its franchisees

unique and that is why the implementation of partnership marketing

rules between them can be especially advantageous.

Such a special relationship exists only in franchising. Yet, it

must be emphasized that the formal relation linking franchisor and

franchisee does not obligate them to some different aspects of the

teamwork such as: commitment, cooperation, trust etc. Nevertheless,

those effects can be obtained by implementation of the partnership

marketing rules to the relations between franchisor and franchisee.

The paper is aimed to examine the main aspects of relation-

ship marketing in the sphere of franchising. It was planned to answer

the following questions:

8

• Is the idea of relationship marketing advantageous for the

development of franchising chains?

• What should motivate franchisors to engage in the long-term

relationships with franchisees?

• What activities should be undertaken by franchisor to create

the successful relationship with franchisees?

• Has relationship marketing already been adopted in the fran-

chising chains?

It is hypothesized that, nowadays, to achieve competitive advantage

of a franchising chain, franchisors should identify, develop and en-

hance the efficient portfolio of long-terms relationships due to the

rules of relationship marketing. A poor communication between

franchisor and franchisee, not adequate help for franchisees and too

slow franchisor’s reactions to the changes which take place in the

environment are the biggest obstacles to the creation and mainte-

nance of long-term relationship between franchisor and franchisees.

2. Factors influencing the partners’ relationship in case of fran-

chisor-franchisee co-existence

Various determinants of business relations were analyzed in the lit-

erature (Table 2.1). While some of them might be difficult to meas-

9

ure, others have more quantitative mettle. The examples of qualita-

tive factors are: by partners’ engagement, reliance, satisfaction,

flexibility, and responsibility and even characters’ fit (also described

by as “chemistry” between the subjects of relation). The most pre-

vailing, quantitative determinants of relationship are communication

on the one hand and distance between the partners of relation on the

other hand (Harwood T. G., Garry 2006). Moreover, the fundamen-

tal elements of building the long-term relations are among others:

common aims, understanding of individual needs, expectations and

ability to cooperate in case of conflict.

POSITIVE DETERMINANTS NEGATIVE DETERMINANTS

Common aims Lack of ability to resolve con-

flict

Engagement Uncertainty

Reliance Asymmetry in relation

Effective communication Distance between the sides of re-

lation

Loyalty -

Satisfaction -

cooperativeness -

Source: Own elaboration

Table 2.1: Basic determinants of long-term partners’ relation

10

Factors in Table 2 indicate a number of long-term relations includ-

ing: reliance, engagement, communication and ability to cooperate

in the face of conflict (Ndubisi 2007, Murphy et. al. 2007, Rodriquez

2005). The confidence is thought to be fundamental in creation of

the relation. It must be emphasized that it occurs only when uncon-

strained and unrestricted cooperation is present. The confidence is

accompanied by both a shared acceptance of obligation to protect

the rights and matters of both: partners and a common believe in fol-

lowing the rules by the partner. The confidence develops gradually

and brings a rising number of positive aspects of cooperation, like

efficient communication, effective dealing with problems, better

identification and acceptance of common aims as well as a share of

responsibility (Murphy, Laczniak, Wood 2007) .

The other effect of rise in confidence is also an engagement,

which is defined as a wish to sustain a valuable relation. Some au-

thors have observed that the rise in partners’ engagement increases

the satisfaction of achieved benefits (Ndubisi 2007). Moreover, the

presence of engagement and confidence in relation between the

partners in business encourages them to further efforts (Murphy,

Laczniak 2007).

The confidence results also in more effective communica-

tion, which acts as a specific binder during creation and maintenance

of relation. Ndubisi (2007) defines communication as the ability to

provide reliable information on time. Here, the communication may

be interpreted as an interactive dialog that occurs prior to , during or

after the sale process (Ndubisi 2007).

11

The lack of effective communication is a frequent reason of

conflict that in turn may influence the relation between the business

partners. The ability to cooperate in face of conflict situations is cru-

cial to achieve satisfaction of both sides (Anderson, Narus 1984). It

is important, however, to avoid potential conflicts and solve the

problems before they rise into large scale and elaboration of various

potential results immediately after the occurrence of disagreement.

The effect of cooperation in problematic issues determinates a de-

gree of satisfaction as well as influences the loyalty in relation

(Ndubisi 2007).

Thus, there are many determinants regarding formation and

maintenance of relations in franchising. They have a varying influ-

ence on both the relation strength and efficacy of the partnership.

However, the basic conditions for the creation of long-term relations

are common aims and joint conception on their realization. There are

no doubts that the first condition is met in relation between franchi-

sors and franchisees. Both, franchisor and franchisee, decide to co-

operate in achievement of certain aims which are mutually depend-

ent by signing the franchising agreement.

The franchisors and franchisees equally anticipate the finan-

cial benefits from their cooperation. The franchisees expect benefits

based on the rights to run a business under the well known trade-

mark and a tested know-how, whereas franchisors look ahead to

profits from franchising fees. The larger success of offered products

and better image of franchisor in a distinct franchising chain, the

higher income can be generated by its franchisees.

12

This is obvious that both franchisors and franchisees expect

benefits based on the addend value resulting from functioning within

the network. The achievement of these profits is possible under the

condition that both parts follow the obligations of the agreement re-

garding concern of the firm’s image by franchisees. On the other

hand the sustain of market position of the firm by franchisors taking

care about fame and reputability of the firm, and by developing the

products according to the trends and needs of clients. It is important

for both franchisors and franchisees to accomplish the commitments

originating in the agreement and to be responsible to all subjects par-

ticipating in franchising chains (Allan, 2003).

The common aim of franchisors and franchisees is also the

risk reduction. Franchisors use franchising as an expansion method

letting them to reduce the risk associated with opening new outlets

(this especially relates to novel markets). Yet, they always risk their

trademark and reputation. Contrary, the entrepreneurs accessing the

franchising network want to reduce the risk related to individual en-

trepreneurship by implementation of procedures worked out by

motherly firm as well as by avail of its help. Still, as the independent

subjects they take a risk associated with entrepreneurship all the

time.

The aim convergence of franchisors and franchisees is tight,

thus the basic criterion for formation of long-term relationships be-

tween them is met. This is also important that by the investments in

the same company and by signing the franchising agreement both

sides find the familiar vision for achievement of these aims. More-

13

over, both partners must trust each other from the beginning. Sign-

ing the agreement is a simple manifestation of this trust. Thus, there

are reasons to transform the cooperation into the long-term partner-

ship. However, the evaluation of this relation after signing the con-

tract is also dependent on other factors which were previously dis-

cussed.

According to franchisors from Great Britain (Doherty, Alex-

ander 2004). the fundamental element of initiation of long-term rela-

tions is a properly chosen partner. There must be a “chemical factor”

between them and they can be able to work together. Otherwise, in

case when the only selection criterion of franchisee is the financial

resources, the chances for relation development are very limited.

Interestingly, franchisors claim that this is not the franchising

agreement that stabilizes the relation with franchisees but rather the

open and continuous communication, trust, support and help offered

to franchisees. Their relation based predominantly on literal assizes

arising from the agreement instead of trust and engagement, have no

perspectives.

Similar opinions were recalled in another investigation. Al-

though this study was not focused on relations but rather on identifi-

cation of controlling tools upon franchisees and on the sources of in-

formation available to mothering firms, it showed that formation of

effective relations starts when the proper partner is chosen. The fol-

lowing stages of this process include the efficient communication

and trust between both sides (Doherty, Alexander 2006).

14

The synthesis of experiences and observations made by fran-

chisors regarding the factors determining the long-term relations in

the sphere of franchisor-franchisee should be confronted with the

point of view of franchisors. However, till now no study was con-

ducted in this area. One can only recall the studies conducted among

the franchisees which were focused on analysis of chosen variables

influencing the relations between franchisors and franchisees. These

studies revealed a positive impact of cooperation and negative influ-

ence of conflict on satisfaction of franchisees. They have also shown

that the fundamental factor which influences these elements is com-

munication. Thus the exchange of market information between fran-

chisor and franchisee positively affect their cooperation (Rodriguez

2005).

Mentioned above research with the theme show that func-

tioning of franchisors and franchisees in literal partnership oblige

both parts of agreement to follow the particular behaviors. The fran-

chisee agreement does not guarantee such aspects of effective coop-

eration like: engagement, cooperation, common aims, trust etc. Yet,

the most important factors influencing the creation and sustain of

long-term relations between franchisors and franchisees are:

• Proper selection of partners

• Effective communication

• Adequate action in conflict situations

• Support and help offered to franchisees

• Engagement and trust

15

The identification of these components may serve as a clue

for franchisors willing to implement the rules of relation marketing

in their contacts with franchisees.

3. Implementation of relation marketing in franchising chains

The implementation of relation marketing in dealings be-

tween the subjects of franchising agreement may result in distinct

advantages for both franchisors and franchisees. A partnership aris-

ing between those entities should result in an increase of their en-

gagement in cooperation regarding the realization of common aims.

The engagement of franchisees seems to be an obligatory

condition which under present circumstances decides about a market

success of an entire franchising chain. The direct contacts with the

final customers cause the franchisees responsible for shaping the

bonds with customers of offered by that chain goods or services.

Moreover, these are the owners of franchising units who are the

most important source of information about the customer as well as

they are the basic link in contacts with the clients. Due to active atti-

tude and eagerness of franchisees the franchising networks can

quickly and properly response to the signs coming from the market

and, hence, create the offer which is fully oriented to the clients’

needs. Such an interaction cannot be substituted by a formal and

sometimes forced communication with customers. As shown in pre-

vious research (Harwood, Garry 2006) such a communication is ca-

pable to pass on only a third of information and knowledge poten-

16

tially available to the subjects of relation. The increase of effective-

ness of this process is possible due to the trust and partnership of

both parts.

The satisfaction of franchisees and close cooperation be-

tween them and franchisors can enhance not only the profits of en-

tire chain but also the communication with final costumer. This

communication is extremely important particularly in chains with a

small number of own units or those not possessing them at all. Un-

der these circumstances the franchisor has a very limited ability to

identify the needs of its clients. From this point of view the relation

marketing in franchising chains can be a solution of increased com-

petition as well as increased clients’ demands. This is also the ea-

gerness of both, franchisors and franchisees, which is fundamental

for a successful long-term relation between these partners. Franchi-

sors who want to develop the long-term relations with franchisees

should then begin at finding the right business partner (Fig. 3.1). The

selection of franchisees should be very scrupulous rather than based

only on financial criterion. The experienced franchisors claim that

the necessary condition to create the long-term relations with fran-

chisees is presence of sympathy that is also frequently described as

”chemical factor” (Doherty, Alexander, 2004).

The accurate selection of partners decides about the further

communication between them, common work on familiar aims and

closer development of their relation. The definitive decision regard-

ing the cooperation with a candidate to a franchising chain should be

17

made when both parts show to each other their intensions and expec-

tations as this allows to convince to realize their common vision.

The next step in the development of relations between fran-

chisors and franchisees is close cooperation based on mutual sup-

port, information exchange and work to achieve the familiar aims.

As an affect of these actions one can expect an increase in engage-

ment which in turn is reinforced by realization of aims of both parts.

This should lead a franchisor and its franchisees to be more confi-

dent in their relationships. Continuing, all these factors should be re-

flected in shared satisfaction and loyalty thus building a long-term

relationship between franchisor and franchisee.

18

Potential franchisee

Presentation of intensions and common aims

Partner selection

Signature of agreement - compromise

Close cooperation and information exchange

Cooperation to achieve aims

Increase in engagement rein-forced by realization of aims

Partnership development

LONG-TERM RELATIONS

19

Source: own elaboration

Fig. 3.1: Stages in formation of long-term relation between franchi-

sors and franchisees

The adaptation of relationship marketing ideas at that level appears

to be easier then in other situations because those entities are for-

mally tied by the franchise contract (table 2). It obligates them to

subsequent activities such as frequent contacts and information ex-

change. At the beginning this can lead to the creation of commit-

ment and trust between them followed by long-term partnership.

Formation of long-term relationship between franchisor and franchi-

see requires continuous work of both sides. However, it should be

emphasized that there are many factors facilitating this process in

franchising chains (table 3.1). From the beginning of the cooperation

both sides are linked by a formal agreement which obligates them to

follow a particular behavior. This, simultaneously, promotes the de-

velopment of relations between them (e.g. communication, control,

etc). Similar to franchisors, also franchisees invest in this particular

relationship and work for maximal profits (Wadsworth, Tuunanen,

Haines, 2003). They are coupled with each other by common and

linked aims. Moreover, they get familiar with each other as the time

of cooperation elapses.

Weaknesses Strengths • The franchise contract gives • Formal bonds between fran-

20

the power of the franchise relationship directly to the franchisor. He/she decides about almost all of the con-ditions of the franchise co-operation (especially in car-bon-copy chains).

• Franchisees can negatively perceive the regular con-trols of their outlets made by the franchisor.

• Franchisees may not see the advantages of the imple-mentation of the rules of re-lationship marketing.

• In the huge franchising chains franchisors can have some problems with the proper communication with franchisees.

chisor and franchisees as a re-sult of franchise contract.

• The possibility to gain the scale effect by the coopera-tion undertaken by all entities in the franchising chain.

• Franchisees are reluctant to change their franchisors and more likely to carry on the current agreements.

• The opportunity to generate profit: both by the franchisor and franchisees.

• A frequent contact between franchisor and franchisees can cause creation of partner-ship and the information ex-change.

Source: own elaboration Table 3.1 Weaknesses and strengths of the implementation of rela-tionship marketing in the franchising chains between franchisor and franchisees

The franchisors’ and franchisees’ goals are combined. Al-

though franchisors benefit mainly from system-wide sales while

franchisees benefit from unit profit (Doherty and Alexander 2006),

their incomes are dependent on each other. So it is their concern to

improve the quality of goods or services offered in franchising

chain. Therefore both franchisor and franchisees can be interested in

a very close cooperation.

Moreover, bigger chances to create a long term relationship

between the sides of franchise agreement are resulting from the fi-

nancial engagement of franchisees when joining the franchising

chain. After the expiration of the franchise contract it is more advan-

21

tageous for them to continue the cooperation with a chosen franchi-

sor rather then searching for a new one. Consequently, if they are

satisfied with a present franchising chain they will be reluctant to

find other franchisors and will be more likely to carry on with the

current agreement.

However, there are also some obstacles that can negatively

influence the implementation of relationship marketing between

franchisor and franchisees. First of all franchisees, as entrepreneurs,

prefer to set their own direction and control their own destinies

rather than be controlled by franchisor management (Doherty and

Alexander 2006). Sometimes they can feel interdependent and com-

pletely dominated by the franchisor. Because of this they may not

perceive a close relationship with the franchisor to be possible.

Second, franchisees may not see the advantages of the im-

plementation of relationship marketing rules. If they do not find it

profitable and attractive, they will not engage in this partnership.

Third, when it comes to the huge franchising chains (espe-

cially in case of international franchising) franchisors can have some

problems with the proper communication with franchisees. As a

consequence, the franchisee may feel disappointed with the coopera-

tion and will not positively perceive the whole relationship with the

franchisor.

Nevertheless, these problems are not the obstacles that could

not be overcome. Despite of them, there are still possibilities of the

implementation partnership marketing’s rules to franchisor-

22

franchisee relationships which are even bigger than between some

entities in non-franchise companies.

Contrary the asymmetry of franchisor-franchisee relationship

limits the development of long-term partnership. The position of

franchising chain user is always more or less subordinated to the

motherly firm.

Moreover, the franchisees may have a negative attitude to the

partnership with their franchisors because of systematic controls per-

formed by franchisor’s representative. On the other hand such con-

trols my also serve as a platform for communication between the

sides or as a mode of problems’ identification that occurs in units of

chain possessed by franchisees. Thus these controls can also be in-

terpreted as a manner of reinforcement of franchisees. It seems to be

essential to inform franchisees about advantages originating in long-

term relations.

4. Methodology

The study was based upon primary and secondary sources of in-

formation. The international literature referring to the discussed

topic and accessible results of the direct studies on creation and sup-

porting the relation between franchisor and franchisees were used.

The primary research was conducted in towns located in Silesia

district in Poland during the year 2007. The franchising brands were

selected from the franchisors’ list gathered by the Polish Franchisors

23

Association. A representative sample of 46 franchisee outlets was

chosen.

The personal interview technique was used. A structured-

undisguised questionnaire for this aim was prepared. It was build

mostly of fixed-alternative questions. As a basis for designing a re-

search instrument, a detailed review of a related literature was car-

ried out.

Descriptive statistics was used to show gathered data. The se-

lected factors influencing the long-term relationship between fran-

chisor and franchisees were analysed by non parametric correlations.

The significant p-level for the correlation coefficient r was bellow

0,05.

5. Selected Results

The research was aimed at finding franchisees’ attitudes to-

wards selected aspects of their relationship with franchisors. There-

fore, respondents were asked to vote their opinions – by means of

seven point measurement scales – about (table 5.1):

• their satisfaction from the fulfillment of expectations from a co-

operation with a franchisor,

• their present relation with a franchisor,

• the chances that in the future they will continue the cooperation

with a present franchisor (after the end of franchise agreement).

24

Details Value How does the practice fulfill your expectations about the cooperation with a franchisor?

4,77

How do you estimate the strength of the present relation between you and your franchisor?

4,6

What are the chances that after the end of franchise con-tract you will continue it?

4,44

* scale from 1 – exceptionally low to 7 – exceptionally high Table 5.1: Respondents’ opinions on the franchisor /average val-

ues*/

The statistical analyzes proved that there is a strong correla-

tion between franchisee’s opinions regarding the strength of their re-

lation with a franchisor and their willingness to prolong the fran-

chise contract after its termination. The Spearman range for this

correlation is 0,84 (p = 0,00004). The higher range franchisees gave

to their relation with a franchisor the more willingly they perceive

the continuation of the cooperation with a present franchise com-

pany (Fig. 5.1).

25

7 6 5 4 3 2

Fig. 5.1: Propensity to long cooperation respectively to with strength of franchisor-franchisee relation and effective communication

Positive respondent’s declarations about the continuation of

the cooperation is also strongly correlated with:

• the franchisor’s activity regard communication and confron-

tation with franchisees (the Spearman correlation was 0,57,

p=0,02),

• the organization of meetings aimed on the integration the en-

tities from the whole franchising chain (the Spearman corre-

lation was 0,54, p=0,03),

• existence of franchisees department in the franchisor com-

pany (the Spearman correlation was 0,53, p=0,03),

26

• the organization of regular courses for franchisees and their

workers by the franchisor company (the Spearman correla-

tion was 0,53, p=0,03).

Moreover, there was a negative correlation between franchisees

declarations concerning the continuation of franchise agreement and

a franchisor activities in a creation of relationships with the final

customers. The Spearman coefficient for this correlation is - 0,6

(p = 0,001). The more franchisor made to maintain customers the

more willingly franchisees perceived the future cooperation with

him/her.

The analyzes also showed that a significant correlation be-

tween the franchisees’ opinion regard the strength of their relation

with a present franchisor and the level of fulfillment franchisee’s

expectations exists. Respondents gave a higher score to the strength

of their relations with a franchisor when their expectations were sat-

isfied.

To identify franchisees’ expectations, respondents were

asked about the areas which disappointed them the most during the

cooperation with a franchisor company. It turned out that over half

of researched franchisees expected greater franchisor’s help in solv-

ing problems which appeared in their outlets. Also, some of them

were dissatisfied from the information exchange about the market

and from the activities undertaken by the franchisor aimed on main-

taining customers. A small group of respondents was also disap-

pointed from a poor communication between them and their franchi-

sor.

27

Franchisees were also asked about the factors which would

increase their loyalty to a present franchisor. Most of them indicated:

a bigger price reduction for the products delivered by the franchisor,

a greater help from the franchisor and a lower loyalty fee. Moreover,

for some of them also important are: franchisors’ trust, more often

contact with franchise company and activity of franchisor for the

changes which take place in the market (table 5.2).

Details Percent

(%) greater franchisor’s help 50 a better paying condition for the product delivered in the franchising chain

56,25

lower loyalty fee 43,75 larger franchisor’s activity for the changes which take place in the environment

6,25

bigger franchisors’ trust to franchisees 12,5 oftener contact with franchise company 6,25

Table 5.2: Respondents’ attitude concerning their loyalty to franchi-

sors /%/

In order to identify franchisees’ attitudes towards their rela-

tionship with franchisors companies, the Likert scale was used (Ta-

ble 5.3). This enabled to check the level of the implementation of re-

lationship marketing between franchisor and franchisees.

Details Percent

28

(%) 1. I could negotiate with a franchisor

the conditions of franchise agree-ment

77,8

2. Franchisor cares about the problems regarding my outlet and he/she helps me to solve them

72,22

3. Franchisor is trying to recognize my needs

66,67

4. Franchisor organizes regular courses for me and my employees

55,55

5. In the other franchising chain I would have better cooperation condi-tions

22,22

6. Franchisor cares for my suggestions and opinions

72,22

7. I completely trust my franchisor 33,33 8. My franchisor treats franchisees as

his/her partners 66,67

9. Franchisor is opened for the dialog with his/her franchisees

72,22

Table 5.3: Respondents’ attitude to statements concerning selected

aspects of the respondents’ relationship with franchisor company /a

total of answers ‘I completely agree’ and ‘I agree’ in …%/

6. Conclusions

A conducted research shows that franchisees’ motivation for

maintaining relationship is complex and inter-related. It also reveals

that the most important for relationship development are franchi-

sees’ satisfaction and fulfillment of expectations. Moreover, the re-

search findings proves that the dialog between franchisor and fran-

chisee, and franchisors’ help in solving problems (which exist in

29

franchisees’ outlets) are the main determinants of franchisees’ satis-

faction.

Furthermore, the survey supports the findings from previous

empirical research which were conducted in the marketing channels

(e.g. Sheng et. al. 2005; Morgan and Hunt 1994; Anderson and

Weitz 1992; Białaszewski and Giallourakis 1985), emphasizing the

important role of communication in the creation of relationships.

According to its results an improper communication between fran-

chisor and franchisee is the biggest obstacle in the maintenance of

long-term relationship between those entities.

A poor communication among franchising company and its

franchisees often results in fact that the franchisors’ help is not ade-

quate to their franchisees expectations, meanwhile this area is

thought by them as a very important sphere. As a consequence of

such a state, franchisees negatively perceive the cooperation with the

franchisor what, in turn, leads to an abrupt termination of their coop-

eration.

In addition, the ineffective communication between franchi-

sor and its franchisees influences negatively the franchisor’s reac-

tions to the changes taking place in the environment. If such re-

sponse is improper or too slow then the competitive position of the

franchising chain could be worse. This causes the reduction of in-

comes of both franchisor and its franchisees. As a consequence fran-

chisees do not perceive such cooperation positively and do not think

about the long-term relationship with a particular franchisor.

30

In conclusion, this research results indicates a strong need to

implement the partnership marketing rules to franchisor-franchisee

relations. This can be achieved by the creation in the franchisor’s

company the unit responsible for the creation and maintenance of

the long-term relations with franchisees (figure 6.1).

Figure 6.1. The model of creating the efficient relations between

franchisor and franchisees

The specialized department responsible for creation and

maintenance the long-term relations with franchisees should mostly

concentrate on the recognition of franchisees’ needs and identifica-

tion of their problems. Among the main task of its workers there

must be an information exchange and an open dialog with franchi-

sees. It means that they should not only gather all information re-

ceived from the franchisees, but also analyze and verify them. Based

F R A N C H I S O R

The department responsi-ble for creating and main-taining the long-term re-lations with franchisees • The person responsi-

ble for the region 1 • The person responsi-

ble for the region 2 • The person responsi-

ble for the region 3 • The person responsi-

ble for the region n

F R A N C H I S E E S

INFORMATION

INFORMATION

INFORMATION

INFORMATION

INFORMATION

31

on selected information the workers of this department ought to dis-

cuss with franchisees the most important issues and talk about the

possible solutions or show their propositions. These tasks are par-

ticularly important because as revealed by the results of conducted

research, a lot of dissatisfied franchisees felt ignored by the franchi-

sor and were unwilling to prolong the relationship with its franchis-

ing company.

Therefore, the formation of the mentioned department in the

franchisors’ firm is very important. It improves the chance for a

long-term relationship among franchisor and franchisees as well as it

leads to a better efficiency of the whole franchising chain and en-

hances its competitive position.

The research findings show that in some franchising chains

departments which take care about franchisees have already existed.

However, they were mostly specialized in controlling franchisees’

outlets rather than in creating the long-term relationships.

7. Research Limitations/Implications

The survey in its practical part can enable franchise compa-

nies to build profitable relationships with franchisees by means of

applying appropriate marketing tools. However it has a few limita-

tions. First, the current study was made on a sample of Polish fran-

chisees. A comparative research in other countries might complete

its results. Second, the investigation was only conducted from the

32

perspective of franchisees. Perhaps, the same study conducted on the

franchisors or dyadic perspective might have influenced the results.

The additional research can extend the knowledge about the

idea of relationship marketing in the franchise chains. Therefore this

topic should be the subject of further direct empirical testing.

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