This study investigates the required business-related qualifications on the part of prospective franchisees of real estate brokerage services as well as the question why they may prefer to buy a business format franchise over running an independent business based on their own experience, expertise, know-how and skills. As for the franchisor perspective, a major focus was put on the management of potential areas of conflict between power and control along the lifecycle of a franchise relationship.
Anecdotal evidence from a convenience sample of three business format franchise systems highlight the importance of intangible indicators for the quality of professional services in customers’ decision-making with brand as the driving factor for franchisees’ motivation, whereas training especially prior to opening seems to be less crucial than franchise theory suggests. The possibility to blueprint professional services and real estate brokerage services in particular is limited due to the heterogeneity of properties and local market conditions, for instance. Because of divergent economies of scale especially with regard to information technology resources, network effects also play an important role. Both franchisors and franchisees agreed on the significantly increased efficiency of franchise owners compared to branch managers. No major differences have been found in the terms and conditions of the franchise agreements.
Table of Contents
A Introductory Part
A.1 Objective and outline of the paper
A.2 Foundations and terminology
A.2.1 Origins and development of franchising
A.2.2 Definition and dissociation from agency and pyramid selling
A.2.3 Typologies and the difference between business format franchises and product or trade mark franchises
A.3 The role of franchising in the economy and the franchise community in New Zealand
A.3.1 Franchising statistics
A.3.2 Uneven pattern of development in product/trade mark franchising and business format franchising
A.3.3 Franchising industries
A.3.4 Regulations and institutions
B Theoretical Part
B.1 Motivations in business format franchise systems
B.1.1 Why franchise a business?
B.1.2 Why take up a franchise?
B.1.3 Disadvantages of franchising
B.2 Franchisor-franchisee relations
B.2.1 Power and control in business format franchises
B.2.2 Strategies for avoiding dissatisfaction
B.3 Structure of business format franchise agreements
B.3.1 General comments
B.3.2 Negotiability of the contract
B.3.3 Duration of the franchise contract
B.3.4 Territorial rights
B.3.5 Payments
B.3.6 Termination
B.3.7 Assignment
C Empirical Part
C.1 Survey design
C.1.1 Selection of franchise systems
C.1.2 Method of survey
C.2 Background
C.2.1 Company profiles
C.2.2 Franchise development
C.3 Franchisor perspective
C.3.1 Motivations
C.3.2 The pre-opening relation
C.3.3 Nature of the franchise
C.3.4 Key features of the franchise agreement
C.4 Franchisee perspective
C.4.1 Motivations
C.5 Franchisor-franchisee relations
C.5.1 Communication
C.5.2 Problems
C.5.3 Controls
C.6 Summary and conclusions
D Appendix
D.1 Definitions of franchising by the IFA and BFA
D.2 Covering letter to franchisors with interview outline
D.3 Guideline for semi-structured interviews with franchisors
Research Objectives and Key Topics
The research investigates the motivations behind establishing or joining a business format franchise, specifically within the New Zealand real estate brokerage sector, while examining the dynamics of the franchisor-franchisee relationship regarding power, control, and conflict management.
- The business-related qualifications and motivations of prospective franchisees.
- Theoretical and empirical analysis of franchise relationship management.
- Comparative field study of selected New Zealand real estate brokerage franchises.
- The role of branding, support structures, and network effects in franchise systems.
- The management of conflict areas such as power, control, and ongoing fees.
Excerpt from the Book
B.2.1.1 Parent-child analogy
Mendelsohn (1992) draws an analogy between the franchisor-franchisee relationship and the parent-child relationship. During the franchise’s early stages, the franchisee is like a child who depends upon the franchisor for information and help in understanding the knowledge acquired. As the franchisee grows and gains practical experience, he becomes less dependent and the role of the franchisor diminishes. In some cases, the franchisee may become independent to a point where he regards himself as being totally responsible for the success of the business. Therefore, he may want to end the association with the franchisor and resents having to pay the periodic payments. Just as in the parent-child relationship the child will become less dependent and more fiercely independent when it grows older. It will have its own ideas, resents the need for parental control and rejects parental influence. However, as emphasised by the author, there is a vital difference between these two relationships. Unlike the parent-child relationship, in which the child is more and more free to do what it wants to as it grows older, a franchisee is locked into the franchise relationship throughout the term of the franchise contract.
Summary of Chapters
A Introductory Part: This section defines the fundamental concepts of franchising, its historical development, and its economic significance, particularly within the New Zealand context.
B Theoretical Part: This chapter explores the motivations for franchising, the psychology behind the franchisor-franchisee relationship, and the typical structural elements found in franchise agreements.
C Empirical Part: This section presents findings from a qualitative field study, comparing the perspectives of franchisors and franchisees in the New Zealand real estate market regarding support, communication, and operational challenges.
D Appendix: This part provides supplementary material, including formal definitions of franchising by industry associations and the methodological guidelines used for the research interviews.
Keywords
Franchising, Business Format Franchising, Real Estate Brokerage, New Zealand, Franchisor-Franchisee Relations, Network Effects, Brand Management, Franchise Agreements, Conflict Management, Entrepreneurship, Professional Services, Market Expansion, Operational Efficiency.
Frequently Asked Questions
What is the core subject of this research?
The research focuses on the motivations behind business format franchising and the nature of the relationship between franchisors and franchisees, specifically within the New Zealand real estate brokerage sector.
What are the primary thematic areas covered?
The study covers the definition and typology of franchise systems, the motivations for franchising, the psychological aspects of the franchise relationship, and the practical structure and management of franchise agreements.
What is the primary research goal?
The goal is to investigate why practitioners prefer business format franchises over independent businesses and how franchisors manage the critical balance of power and control within these relationships.
Which scientific methodology is applied?
The research uses a comparative field study approach, utilizing semi-structured interviews with practitioners in selected New Zealand real estate franchise systems.
What does the main body of the work address?
The main body is divided into a theoretical analysis of franchise concepts and an empirical section that presents qualitative insights gathered from franchisors and franchisees regarding their experiences.
Which keywords characterize this paper?
Key terms include Franchising, Business Format Franchising, Real Estate Brokerage, New Zealand, Franchise Relations, Brand Management, and Network Effects.
How does the author characterize the franchisee's initial development?
The author uses a "parent-child analogy" to describe how franchisees move from an initial state of high dependency on the franchisor to a later stage of increased independence and potential conflict.
What is a key finding regarding the selection of franchisees?
The study highlights a discrepancy between the theoretical expectation that franchisors require industry experience and the reality that many systems accept franchisees without specific prior real estate experience, provided they receive appropriate training.
What is the significance of the "blueprint" concept in real estate franchising?
The research notes that real estate is not a "generic business," making it difficult to fully "blueprint" the entire operation, which shifts the emphasis toward the franchisor’s brand, support systems, and ongoing professional assistance.
- Quote paper
- Thilo A. Bäß (Author), 1998, Motivations and Relations in Business Format Franchise Systems, Munich, GRIN Verlag, https://www.grin.com/document/492144
