Organisational Configuration within Multi-Unit Franchising

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Organisational Configuration within

Multi-Unit Franchising

Organisational Structure, Knowledge Sharing,

Standardisation and Centralisation/Decentralisation as

Characterization of the Choice of Organisational

Configuration within Multi-Unit Franchising

Master Thesis

Dual Masters Award in

Advanced International Business Management

Newcastle University Business School

and

University of Groningen

Faculty of Economics and Business

Maren Sabrina Overmann

Student Number: S2438569 / B2037957

Supervisors: Henk Ritsema (Groningen)

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ABSTRACT

Today, multi-unit franchising is no longer an exception but very common. It appears to even be the dominant of franchising in some industries (Grünhagen and Mittelstaedt, 2005). However, despite its prevalence, in most franchising research scholars do not address the possibility of multi-unit franchising and assume single-unit franchising as the basis (Dant et al., 2011). To respond to this recent statement this master thesis aims to enhance the knowledge about multi-unit franchising and its management in practice from a franchisee perspective. It represents a first step to reveal the specific management issues inherent in the multi-unit franchise business.

To achieve this aim the organisational configuration of the multi-unit franchise business is analyzed by considering the four factors organisational structure, knowledge sharing across units, level of standardisation and level of centralisation/decentralisation. Ten multi-unit franchisees from five different franchise systems within the system catering industry owning between three and 17 units on the German market were interviewed.

Looking at the organisational structure of a multi-unit franchise business, it was disclosed that most multi-unit franchisees make use of unit managers and from a certain size of the business on also employ operations managers. The motivations for a chosen organisational structure are diverse, reaching from a rule set by the franchisor, advice from other multi-unit franchisees to the need for a contact person within the unit. Moreover, it was revealed that all multi-unit franchisees support knowledge sharing between their units to make use of the increased knowledge of their employees and the reduced need for involvement by the multi-unit franchisee and the operations manager. Furthermore, the level of franchisor-independent standardisation is low and does not automatically increase with a growing number of owned units. Regarding the research conducted in the area of centralisation/decentralisation, it was found that finance is centrally handled by all multi-unit franchisees while marketing is mainly centralised. Human resources are handled by a mixture of centralisation and decentralisation.

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LIST OF FIGURES

Figure 1: The Four Aspects of the Organisational Configuration ... 11

Figure 2: Possible Different Parts of the Organisational Structure ... 12

Figure 3: Motives and Reasons for a Chosen Organisational Structure ... 14

Figure 4: Knowledge Sharing across Units ... 15

Figure 5: Increasing Level of Standardisation ... 16

Figure 6: Decision about Centralisation or Decentralisation ... 17

Figure 7: Organisational Structure of D3 ... 24

Figure 10: Organisational Structure of V3 ... 25

Figure 11: Organisational Structure of J3 ... 25

Figure 12: Organisational Structure of K4 ... 26

Figure 13: Organisational Structure of K17 ... 26

Figure 14: Organisational Structure of S3 ... 27

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LIST OF TABLES

Table 1: Job Aspects of the Multi-Unit Manager ... 10

Table 2: Management Key Success Factors of the Multi-Unit Manager ... 10

Table 3: Annual Net Turnover and Number of Units of the Participating Franchise Systems ... 20

Table 4: Franchise System, Number of Units and Status of the Participating Franchisees ... 22

Table 5: Overview of the Organisational Structure of the Multi-Unit Franchise Business ... 28

Table 6: Overview of the Motives and Reasons for the Chosen Organisational Structure ... 30

Table 7: Overview of the Ways of Sharing Knowledge ... 34

Table 8: Areas of Standardisation ... 35

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LIST OF ABBREVIATIONS

HR Human resources

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1. INTRODUCTION

The aim of this chapter is to present the background and purpose of this study. It starts by defining business format franchising and multi-unit franchising as this is the context in which this master thesis takes place. Chapter 1.3 illustrates the practical relevance of the topic before the research deficit is addressed in Chapter 1.4.

1.1. Definition of Business Format Franchising

Business format franchising1_{has been one of the fastest growing business methods in the last 50 years.}

Franchise systems like McDonald’s, Dunkin’ Donuts and Holiday Inn are prominent examples while it can be found in a lot of sectors today: From fast food, pet care, photography, cleaning, fitness to recruiting (Ellis and Pekar, 1979; DiPietro et al., 2007; British Franchise Association, 2013; Franchise Direct, 2013).

In general, business format franchising can be defined as a relationship secured by a contract in which the franchisor sells to the franchisee the right to build up an independent business by using the franchisors’ trade name, product specifications and operating systems. Additionally, the franchisor has to provide ongoing support and training to the franchisee in the phase of implementation and during the running operation. For these rendered services the franchisee has to follow the regulations and standards set by the franchisor and has to pay initial and ongoing fees (Kaufmann and Eroglu, 1999; Combs and Ketchen, 2003; Webber, 2013).

1.2. Introduction to Multi-Unit Franchising

Today most franchisors offer their franchisees the possibility to acquire more than one franchise unit. If a franchisee owns two or more units of a distinctive franchise chain he2 conducts multi-unit franchising (Gómez et al., 2010).

Multi-unit franchising supports the franchisor in reducing the risk of moral hazard and adverse selection. Moral hazard refers to opportunistic behaviour of the franchisee after the contract has been signed and adverse selection considers the possibility to make a wrong choice with a new franchisee. When an additional unit is granted to an existing franchisee which the franchisor knows and appreciates due to his performance so far, this risk can be reduced (Kalnins and Lafontaine, 2004; Gómez et al., 2010).

From a franchisee perspective, Grünhagen and Mittelstaedt (2002) argue that their engagement in multi-unit franchising can be related to the exploitation of economies of scale through spreading costs

1

When ‘franchising’ is used in this master thesis, it refers to ‘business format franchising’. Before ‘business format franchising’ came up ‘traditional franchising’ was mainly used which describes a system in which a franchisee works as an authorized dealer who pays a fee to the franchisor on the basis of the gross margins. In comparison to this traditional form of franchising the today prevalent ‘business format franchising’ uses a market-oriented view and the franchisee no longer only works as a distributor of goods but buys a whole business idea from the franchisor. For more information please compare Grünhagen and Mittelstaedt (2000) and Dant et al. (2011).

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in marketing, management and procurement across units. The second reason is the opportunity of the multi- unit franchisee to influence the decision-making of the franchisor more than a single-unit franchisee.

1.3. Empirical Evidence of Multi-Unit Franchising

Today, multi-unit franchising is no exception but prevalent in most franchise systems (Kaufmann and Dant, 1996; Grünhagen and Mittelstaedt, 2005).

Already in 1996, Kaufmann postulated that single-unit franchising is becoming an exemption in comparison to multi-unit franchising. In the same year, Kaufmann and Dant (1996) found that 88% of the franchise systems participating in their United States of America (USA) study were making use of multi-unit franchising.

In 2012, FRANdata conducted research in the food and restaurant industry in the USA and found that 36% of the franchisees own multiple units. Additionally, they state that multi-unit franchising became increasingly popular since the beginning of the recession due to the reluctance of banks to lend money. This meant that is was difficult to acquire new franchisees and the emphasis for growth was on the existing franchisees (Loten, 2012).

In the United Kingdom, more than 20% of the franchisees were multi-unit owners in 2010. This development is mainly due to the hotel and catering sector where this form of franchising is used above average (bfa and NatWest, 2011).

No research could be found dealing with the question of how prevalent multi-unit franchising is in Germany. However, according to Jan Schmelzle3_{multi-unit franchising is a well-used concept in}

Germany and applied by franchise systems like McDonald’s, Subway, Vapiano, Kentucky Fried Chicken (KFC), Back Factory or clever fit.

1.4. Research Deficit

The introduction above shows that multi-unit franchising is very common. It appears to even be the dominant of franchising in some industries (Grünhagen and Mittelstaedt, 2005).

In most franchising research, researchers do not address the possibility of multi-unit franchising and assume single-unit franchising as the basis (Dant et al., 2011). This is not reflecting reality as a part of the growth in franchise systems is not based on single-unit franchisees but on multi-unit franchisees. Nevertheless, even though this possibility of multiple ownership has not been addressed in the research, some research designed for single-unit franchising could aswell be valid for multi-unit franchising.

3_{Jan Schmelzle is employee at the Deutscher Franchise Verband e.V. (German Franchise Association) in the area of legal}

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However, considering the management challenges multi-unit managers face, those are partly different from the challenges for single-unit franchisees. Multi-unit franchisees need to deal with different single businesses at a time in different locations. This means a multi-unit franchisee needs to supervise units which can differ in their size, local circumstances as well as amount and characteristics of the employees. Additionally, on a general level he needs to coordinate the activities of these heterogeneous units, supervise a higher amount of employees and develop an organisational structure that accounts for all units and that he can supervise effectively. When developing an organisational structure he needs to consider the question which tasks are centralised or decentralised and if there is a need for franchisor-independent standardisation.

As a result, the research findings and recommendations drawn from single-unit franchising are not entirely applicable to unit franchisees and need to be researched under the prerequisite of multi-unit ownership. Additionally, the specific management issues inherent in multi-multi-unit franchising need to be researched and evaluated.

Another research reason can be drawn from the application of the agency perspective. A main reason to use franchising from a franchisor perspective arises from the application of the principal-agent theory. This theory describes the relationship in which a principal delegates work to an agent. As the principal and the agent may have different goals and risk preferences, the agent may take actions that are not in the interest of the principal. To prevent this, the principal needs to design a contract that is outcome based and needs to monitor the agent. In a company context, the principal is a company owner and the agent is a manager. The owner bears the company risk while the manager has only limited responsibility as he is a salaried worker (Jensen and Meckling, 1976; Eisenhardt, 1989a). To minimize the arising risk and costs, some companies decide to franchise their business. This concept creates independent units in which the managers are owners of a business themselves. Consequently, the compensation of the franchisee is determined by the performance of his franchise unit and he has a higher incentive to perform successfully than company managers (Dada et al., 2010).

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supports franchisors in advising their multi-unit franchisees and (aspiring) multi-unit franchisees in possessing knowledge about a successful organisational configuration from a multi-unit franchisee that could function as a model for their own business.

To sum up, even though multi-unit franchising is often applied today, there is hardly any knowledge available how the multi-unit franchisees manage their several units. Therefore, this master thesis aims to enhance the knowledge about multi-unit franchising and its management in practice from a franchisee perspective. This results in the overall research question:

How is the organisational configuration of the multi-unit franchise business created by the multi-unit franchisee?

It represents a first step to reveal the specific management challenges inherent in the multi-unit franchise business and how the principal-agent problem is handled. Thereby an emphasis will be laid on the organisational configuration of the business. However, even though it constitutes a first contribution to the knowledge about multi-unit management, it can only represent a starting point in the area of multi-unit franchise management. To pave the way for future research, propositions will be introduced.

The organisational configuration examined is characterized by the four aspects organisational structure, knowledge sharing across units, franchisor-independent standardisation and the level of centralisation or decentralisation. These topics are chosen due to different considerations. The basis for the considerations was the research conducted on management within multi-unit businesses presented in Chapter 2.2. Following this, single-unit and multi-unit franchise businesses were compared about how they differ in their work and challenges. In this way those four aspects arising as the major fields of decision-making for a multi-unit franchisee compared to a single-unit franchisee were identified. These aspects were addressed in the interviews with the multi-unit franchisees and were confirmed as decisive by the multi-unit franchisees.

Moreover, the motives and reasons are addressed for three out of the four topics. It is important to understand the motives and reasons that lead to the adoption of a certain organisational configuration to simplify the choice of an organisational configuration for a future multi-unit franchisee and to give the franchisor the opportunity to adequately advice their multi-unit franchisees.

One aspect of the organisational configuration is the organisational structure the multi-unit franchisee applies in his multi-unit business. Different forms of organisational structure are possible, e.g. the multi-unit franchisee still manages all units himself, employs unit managers and/or operations managers. Additionally, knowledge will be raised about the reasons and motives for this kind of organisational structure. This results in the first sub-question addressed in this master thesis:

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A multi-unit business allows knowledge-sharing across units. To explore this knowledge sharing the second sub-question asks:

Is knowledge sharing between the different franchise units existent and if yes, how does it take place, in which areas of the business, and what are the motives and reasons for it?

Additionally, owning multiple units gives the franchisee the opportunity and perhaps also creates the necessity to standardise different tasks independent from the standardisation imposed by the franchisor. To raise information about this aspect the third sub-question is:

Which tasks are standardised and does the level of standardisation increase with the growth of the multi-unit business?

The management tasks and responsibilities faced with when owning multiple businesses makes it necessary to consider their possible centralisation or decentralisation. To gain a deeper understanding of the topic the last two sub-questions ask:

Which tasks and responsibilities are centralised and what are the motives and reasons for this centralisation?

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2. L

ITERATURE REVIEW

This literature review starts by giving an overview about the conducted research in the area of multi-unit franchising. It aims to present different areas in which research has been carried out. Thereby it becomes apparent that the topic covered by this master thesis has so far not been in the focus of research.

Following this, literature on multi-unit management is presented. As there is only limited literature available on multi-unit management in general and no literature about multi-unit management in franchising4, the section is followed by presenting literature from four different areas identified as the major areas of decision-making in multi-unit franchising and confirmed as crucial by the multi-unit franchisees participating in the research. At the end, a summary chapter introduces the sub-questions.

2.1. Multi-Unit Franchising

In general, a distinction can be made between sequential multi-unit franchising and master franchising. In the case of sequential multi-unit franchising, the franchisee opens additional units over time which is normally administered by a new franchise contract (Kaufmann and Dant, 1996; Grünhagen and Mittelstaedt, 2005). Master franchising can be divided again into area development franchising and sub-franchising. Area development franchisees are committed to find a certain number of franchisees in a region and time agreed on with the franchisor. In the case of sub-franchising, franchisees are given the right by the franchisor to grant units to other franchisees in a predetermined region (Grünhagen and Mittelstaedt, 2005; Gómez et al., 2010). This master thesis focuses on sequential multi-unit franchising as in this form the franchisee buys and operates a new franchise unit and is mainly responsible for it.

Considering the research conducted in the area of multi-unit franchising, it can be said that it started in the 1980s. But even though some research has been carried out, the topic is still underresearched (Hussain and Windsperger, 2010). Research has been done in the following areas5_:

(a) Motivation and Reasons to Use Multi-Unit Franchising from a Franchisor Perspective Kaufmann and Dant (1996) examine the motivation for a franchisor to use multi-unit franchising. They point out that a higher number of multi-unit franchisees leads to faster system growth. Additionally, they reveal that a higher number of franchise units per franchisee are negatively related to the commitment the franchisor has towards maintaining the franchise relationship.

Garg et al. (2005) reveal that franchisors that are aiming for a high growth rate prefer multi-unit franchising over single-unit franchising. More detailed, sequential franchising is less common than area development franchising. When aiming for uniformity, franchisors prefer area development

4_{According to the author’s best knowledge.}

5_{The multi-unit franchising literature outlined here represents - to the author’s best knowledge - the most valuable literature}

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franchising. Conversely, when focussing on local responsiveness, sequential multi-unit franchising is more popular.

In 2007, Weaven and Frazer (2007a) conduct research to find reasons for the adoption of multi-unit franchising. The study discloses that there is no ownership redirection strategy, meaning that franchisors do not intend to buy back profitable units in future. Their proposition concerning agency cost minimization is supported, showing that multi-unit ownership causes cost savings related to the management of the franchisor-franchisee relationship. Additionally, they find a positive relationship between multi-unit franchising and system uniformity, the value of the franchising brand and a close geographic proximity between existing and additionally granted units. The propositions regarding a positive relationship between multi-unit franchising and system-wide adaptation of changes initiated by the franchisor, local market innovation and future franchisee opportunism as perceived by the franchisor are not supported. As a last point the proposition that multi-unit ownership is used as a reward strategy by the franchisor to influence the franchisee performance is mainly supported.

In the same year, Weaven and Frazer (2007b) also examine characteristics of a franchise system and their influence on the willingness of the franchisor to use multi-unit franchising. The researchers exhibit a positive relationship between multi-unit franchising and the age of the franchise system as well as the managerial corporatisation. Moreover, there is a positive relationship between multi-unit franchising and the plurality of distribution within the system, meaning the study supports that in franchise systems maintaining company-owned units the prevalence of multi-unit ownership is more likely. A negative relationship exists between multi-unit franchising and intra-firm conflicts as well as organisational complexity within the system.

In 2009, Weaven (2009) research again the question why franchisors adopt multi-unit franchising. Surprisingly, the reasons found in 2007 do in part not hold in this research. He reveals – consistent with his expectations – that the franchise system maturity and the usage of multi-unit franchising had a positive relationship. Against his expectations he finds that the application of multi-unit franchising and the degree of franchise system corporatisation, franchise systems using plural forms of distribution, geographical dispersion of units, importance of reward strategies and system growth do not have a positive relationship. For the variable dealing with the level of intra-firm conflicts he shows a positive relationship.

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Weaven and Frazer (2006) compare single-unit and multi-unit franchisees regarding their motivation to enter franchising. For single-unit franchisees the brand, initial training, freedom on an operational level and potential family employment are important. For multi-unit franchisees the vision and the business concept of the franchise system, the continuing support and training, involvement in decision-making, expansion prospects and the governance structure are decisive.

(c) Motivation to Grant Additional Units to Franchisees

Kalnins and Lafontaine (2004) investigate the basis on which additional units are granted to franchisees and reveal that franchisees are approved for additional franchise units if those new units are geographically close to their existing units and if they are contiguous as well as demographically alike.

(d) Propensity to Use Multi-Unit Franchising

A complementary relationship between the duration of the franchise contract and the propensity to use multi-unit franchising is found by Vázquez (2008). Therefore, the incentives multi-unit franchising offers a franchisee are only of importance when the contract concluded is long enough. Moreover, the researcher demonstrates that the likelihood to use multi-unit franchising is lower if the costs of monitoring outlet mangers are high. Conversely, if there is a higher risk of free-riding by the franchisee, the tendency towards multi-unit ownership is higher.

Gómez et al. (2010) study which factors lead to a high usage of multi-unit franchising by connecting it to agency problems in the relationship between franchisor and franchisee. In detail, they find that there is a positive relationship between the use of multi-unit franchising and a geographical concentration of units within the franchising network, network size and franchising within non-repetitive industries. (e) Influence of Multi-Unit Franchising on the Level of Dependence and Autonomy

Dant and Gundlach (1999) reveal that multi-unit ownership has an influence on the level of dependence and autonomy. They detect that a higher proportion of multi-unit franchisees leads to a higher perceived dependence but a lower desire for autonomy vis-à-vis the franchisor from the franchisee perspective.

(f) Benefits of Multi-Unit Franchising for Franchisees

Kalnins and Mayer (2004) discover that multi-unit owners profit from the local market knowledge and experience they have. This finding applies to multi-unit owners in general, whether they are franchised or not.

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2.2. Management within Multi-Unit Businesses

As the area of multi-unit franchising is still widely underresearched and no literature about the management of multi-unit franchise businesses is available, general literature about multi-unit management is presented to give an overview.

Looking at multi-unit management literature, Jones (1999) finds by studying the hospitality industry that there are differences between small business management and multi-unit management resulting in different management challenges. The management challenges resulting from multi-unit operations include:

• No possibility to supervise managers on an operational level directly; • Control over day-to-day operations is not possible;

• Subordinate employees deal with customers on a frequent basis; • The setting of the unit is a key success factor;

• Employees from different labour markets with different behaviour and attitudes; • Shifting of information flow through different units;

• No one organisational culture as business is split into several units.

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Table 1: Job Aspects of the Multi-Unit Manager Importance to multi-unit manager % of time spent on job aspect

Job aspect Description

No. 1 32.7% Restaurant

operations

Enforces consistent company standards, systems, and procedures; evaluates product quality; implements new systems; oversees the delivery of positive customer service, supervises new-product introductions; monitors unit-management activities.

No. 2 23.3% HR management

Supervises effective orientation, training and management of employees; teaches unit managers how to manage people; provides quality feedback; provides promotable managers.

No. 3 22.3% Financial

management

Maintains profitability by monitoring performance, preparing budgets, developing forecasts, authorizing expenditures, controlling costs, and reviewing results with unit managers.

No. 4 10.6% Facilities and

safety

Supervises the overall condition of unit facilities to ensure operational acceptability and competitive readiness and establishes safety-management programs.

No. 5 9.6%

Marketing and promotions management

Implements marketing and sales-promotion plans, prepares units for promotional programs, encourages collection of information on customers and the competitive market. Source: Umbreit (1989)

DiPietro et al. (2007) follow the view of Umbreit (1989) and postulate that there is a lack of research on multi-unit management in the restaurant industry. They highlight its importance by saying that the conducted research shows that the characteristics between single-unit managers and multi-unit managers differ. Therewith they follow the line of research started by Umbreit (1989) and define attributes that are in relation to the successful performance of the managers of multiple units. Thereby the factors do not need to be executed necessarily by the multi-unit manager himself but its consideration needs to be assured. Those factors can be summarized in eight dimensions which are, in essence, congruent to the tasks presented by Umbreit (1989).

Table 2: Management Key Success Factors of the Multi-Unit Manager

Dimension Attributes

Single-unit operations Cost control; personnel training; maintenance of _facilities. Standard operating procedures Regular information collection and successful marketing _{strategy to reach maximum productivity.} Multi-unit strategic planning Set targets; implement plans.

Interpersonal and social responsibilities Consider the surrounding environment by developing managers and regarding food safety.

Travel and visiting units Show presence in units.

Human relations Enhance quality; teamwork support; create and live

values.

Effective leadership Raise turnover; manage resources.

Unit level finances Decide about product prices and number of employees _{within a unit.} Source: DiPietro et al. (2007)

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responsibilities of the multi-unit manager. It does not address the configurational considerations like organisational structure, standardisation, knowledge sharing across units and centralisation/ decentralisation. These considerations are essential when building up a multi-unit business.

2.3. Organisational Configuration

As there is no research on multi-unit configuration that could be taken as a reference to study the configuration of multiple units by franchisees, different aspects are considered to get an insight into these issues. In detail, those aspects are organisational structure, franchisor-independent standardisation, knowledge sharing across units and centralisation/decentralisation. These topics are chosen due to different considerations and illustrated in Figure 1.

Figure 1: The Four Aspects of the Organisational Configuration

The basis for the considerations was the research conducted on management within multi-unit businesses presented in Chapter 2.2. Following this, single-unit and multi-unit franchise businesses were compared about how they differ in their work and challenges. Thereby those four aspects arising as the major fields of decision-making for a multi-unit franchisee compared to a single-unit franchisee were identified. These aspects were addressed in the interviews with the multi-unit franchisees and confirmed as decisive. Generally, these topics thematised are meant as those in the control of the multi-unit franchisee, meaning regardless of the possible rules of the franchisor.

2.3.1. Organisational Structure

The first aspect important for the organisational configuration of the multi-unit franchise business is the organisational structure. The organisational structure of a business is a critical decision as it should support the business in reaching its goals and pursuing its strategy. If a structure is chosen that is not ideal, it can harm the efficiency and effectiveness of the business in the short term and threaten its viability in the long term (Burton et al., 2006).

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divisional configuration every franchise unit constitutes an own business which has a certain degree of independence from each other and from the headquarter, which is in this case represented by the franchisor. The multi-unit franchisee oversees the units and communicates the policies. From theory this kind of organisational structure works most successfully when coordination and involvement from the top are limited ‘and each division is left to run its own business where it has resources and can coordinate its activities to focus on the market for its products, its customers or in its region’ (Burton et al., 2006, p. 64). However, within a franchise system there is a certain degree of standardisation imposed by the franchisor (Kaufmann and Eroglu, 1999) which limits the ability of the unit to adapt its products and services to the customers and region by definition.

Within a multi-unit franchise business, there is one franchisee responsible for several units. Consequently, he has to develop an organisational structure which best fits the needs of this special type of business and ensures its effective functioning. Different theoretical considerations can be made concerning the organisational structure. Kaufmann and Dant (1996) as well as Kalnins and Lafontaine (2004) automatically assume that multi-unit franchisees employ unit managers. However, no research if they actually do could be found. This research aims to shed light on the question if unit managers are employed by multi-unit franchisees. As another possible form of management, the multi-unit franchisee could still manage the multiple units on his own by splitting his time and tasks between them. Nevertheless, some multi-unit franchisees own a high number of units which makes it difficult to supervise them even when there are unit managers applied. Therefore, there might be several hierarchies of control arising out of this increased number of units. Likewise Jones (1999) seems to assume that there are different layers of management within a multi-unit business but he does not discuss them. Following the idea of different management layers, a multi-unit franchisee could assign a unit manager who reports to an appointed operations manager. This operations manager could be responsible for several units and build a hierarchical level between the multi-unit franchisee and the unit manager. Besides those forms describing the organisational structure there are probably other additional forms of unit management. These will be revealed during the research. The possible different parts of the organisational structure are depicted in Figure 2.

Figure 2: Possible Different Parts of the Organisational Structure

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Motives and reasons are researched for three out of the four sub-topics of organisational configuration. However, possible motives and reasons are only explained in this manner in the literature review for the sub-topic ‘organisational structure’. This can be explained by the fact that so far there has been no research at all for this topic. Following this, no motives and reasons could be found in the literature which makes it necessary to examine possibilities. For the topics ‘knowledge sharing’ and ‘centralisation/decentralisation’ literature from other research areas could be consulted to give at least a first insight into possible motives and reasons.

(a) Rules of the Franchisor

As a first reason the rules of the franchisor could lead to a certain organisational structure. The relationship between the franchisor and the franchisee and their rights and obligations is fixed in the franchise contract (Boulay, 2010). As a part of the contract, the franchisor could prescribe the multi-unit franchisee how to handle certain tasks within multi-multi-unit management, referring for example to the organisational structure and employment of unit managers. Thus, in this case, the multi-unit franchisee has to follow the rules of the franchisor and cannot assess by himself what might be best for his business.

(b) Costs

The second reflection rests on cost considerations. The employment of people is always bound to costs (Moderegger, 1996). Therewith, the decision of the multi-unit franchisee to hire a unit manager instead of himself doing this job is also a decision towards a higher percentage of fixed costs.

However, from a certain number of units on, the multi-unit franchisee should strategically not just be involved in day-to-day business activities, but also work on the overall management issues with the goal to enhance the overall performance and profit of his business. The gain of this could be higher than the costs bound by unit managers.

(c) Leadership Style

Besides rules of the franchisor and cost considerations, the leadership style practiced by the multi-unit franchisee could be decisive for the composition of an organisational structure. Thereby, leadership can be understood as ‘an interactive process that provides needed guidance and direction’ (Goodnight, 2004, p. 820). Leaders differ in their way they provide guidance and direction which results in different leadership styles: Autocratic, democratic and laissez-faire leadership.

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The democratic leader highly values his employees and designs an open, respectful relationship which sees equality and trust as its basis. In contrast to the autocratic leader this leader supports open communication between employees. The leader acknowledges the abilities and capabilities of his employees and supports their development. Through this he creates a working atmosphere that is shaped by motivation and teamwork. The democratic leader expects high performance and supports this by rewards (Goodnight, 2004).

Leader with a laissez-faire attitude do not guide their employees. Based on the assumption that the employees know best what they have to do, he leaves them alone to take free choices. Information exchange works on an employee-employee basis. The leader only takes action if he needs to deal with a crisis or react to a certain event. This leadership style leads to inefficiency and chaos (Goodnight, 2004).

The leadership style could influence the organisational structure of the multi-unit franchise business with an autocratic leader controlling his employees more than a democratic leader. This could influence the amount of employees hired to control others. Additionally, the autocratic and democratic leader will probably have a more distinctive reporting structure than a laissez-faire leader.

(d) Advice from Other Multi-Unit Franchisees

Additionally to the motives and reasons stated above, relationships between franchisees can have an influence on the behaviour and attitude of franchisees (Dickey, 2003; Lawrence and Kaufmann, 2011). Multi-unit franchisees might tell other (aspiring) multi-unit franchisees about their organisational structure and service as an example of good practice. This might influence the organisational structure applied by a multi-unit franchisee.

(e) Finding an Appropriate Manager

As a last point, it might be decisive if the multi-unit franchisee finds a manger that he views as appropriate for running his unit. Only if he considers a manager as competent and trustworthy he can leave management tasks to him.

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2.3.2. Knowledge Sharing across Units

Besides the organisational structure knowledge sharing across units is examined in the context of multi-unit franchising as shown in Figure 4. Nowadays, knowledge is a strategic resource and critical part of the organisational success. Thus, the creation, sharing as well as the leveraging of knowledge is fostered within organisations (Drucker, 1993; Becerra-Fernandez and Sabherwal, 2001; Ipe, 2003). In general, knowledge sharing between individuals can be defined as ‘the process by which knowledge held by an individual is converted into a form that can be understood, absorbed, and used by other individuals.’ (Ipe, 2003, p. 341) and that leads to a total growth of knowledge (Quinn et al., 1996). In the context of multi-unit ownership it might give the business the opportunity to share knowledge across the borders of the single unit. Once the knowledge is shared between units, the sender gives access to his knowledge and through feedback or modifications by the receiving unit the overall knowledge grows.

While Sorenson and Sørensen (2001) state that learning benefits can be utilised in the context of multi-unit companies, they see this advantage critical for single-multi-unit franchisees. To use the knowledge from other units, a common knowledge base is needed. But franchisees are independent entrepreneurs that make use of local adaptations which can minimize the value knowledge has for other units (Sorenson and Sørensen, 2001). However, when a franchisee owns several units he builds a common base for all, comparable to a multi-unit business. Consequently, the possibility of knowledge sharing could create a competitive advantage for the multi-unit franchisee that is not possible for a single-unit franchisee. Therefore, it is aimed to evaluate if multi-unit franchising creates this chance that cannot be exploited in that intensity within single-unit franchising.

The opportunities to share knowledge can be either formal or informal. A formal way of sharing knowledge is the composition of structured work teams or the provision of training programs. Informal occasions are social networks and personal relationships and make up the greater part in this process. However, the process of sharing knowledge and the willingness of the employees to do so always depends on the company culture and if it positively influences it (Ipe, 2003).

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2.3.3. Standardisation

Owning several units might give the multi-unit franchisee the opportunity and perhaps also the necessity to standardise several tasks and procedures. Generally, standardisation describes the establishment of procedures through routines (Martinez and Jarillo, 1989). It describes the ‘extent to which activities are subject to standard procedures and rules’ (Child, 1984, p. 164).

According to Aldrich (2008) the size of an organisation as well as its complexity has a positive impact on the likelihood of standardisation. It leads to higher efficiency and facilitates bureaucratic operations. As a prerequisite, the situation in which the standardised rules are applied needs to be relatively steady, recurring and few enough to allow the matching of the situation with the fitting rules (Thompson et al., 2003).

While multi-unit franchisees are already subject to a high level of standardisation imposed by the franchisor, they might additionally develop best practices to effectively manage their mini-chains and enhance their overall performance. Thereby, the amount of standardised rules and procedures might be more for franchisees owning a higher amount of units compared to multi-unit franchisees owning a lower amount of units. As standardisation issues might have an influence on the successful functioning of the multi-unit franchise business, its appearance will be examined in this master thesis and is illustrated in Figure 5.

Figure 5: Increasing Level of Standardisation

2.3.4. Centralisation and Decentralisation

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There is a tendency towards centralisation within an organisation if the decision-making is more likely taken over by the top while in the case of decentralisation units or employees are allowed to take decisions which would be taken on a higher level in comparable organisations (Brooke, 1984). There are different levels of centralisation or decentralisation observable in organisations. As a small owner-managed company grows, the manger needs to evaluate how to effectively manage his business and perform the different tasks (Carnall, 2007).

As Brooke (1984), Child (1984) and Carnall (2007) describe, the level of centralisation or decentralisation depends on the circumstances, taking into consideration the strategic importance of the decision that has to be taken and the organisation and its context in relation to its capabilities and contingencies.

Centralisation allows the manager to have a broader overview about the company and to ensure the pursuance of policies. It allows fast decision-making and helps to rationalize as different tasks are only performed once (Brooke, 1984; Child, 1984; Carnall, 2007). To interpret this in the sense of multi-unit franchising, centralisation might allow the formation of departments that work for all units. Examples might be the central handling of HR, finance or marketing. Thereby duplications can be avoided and efficiency increases. Additionally, if all important decisions are still taken by the multi-unit franchisee, he can ensure that these decisions are taken in his interest.

Decentralisation alternatively allows the manager to delegate certain tasks and responsibilities to employees which gives him the possibility to focus on management tasks like long-term planning. Additionally, the responsibilities that will be assigned to the employees increase their motivation and therewith positively influence their performance and job satisfaction (Brooke, 1984; Child, 1984; Carnall, 2007). It also allows greater flexibility and can be seen in a faster response to change and also could take into consideration local conditions in a greater amount (Child, 1984). Thus, decentralisation has advantages for the multi-unit franchisee as the organisation grows. It gives him the possibility to focus on important planning and management tasks. Supportive and operational6_{tasks can be}

performed by employees.

Figure 6: Decision about Centralisation or Decentralisation

The level of centralisation and decentralisation raises the principal-agent problem again. In their article, Nohria and Ghoshal (1994) apply principal-agent theory to headquarter-subsidiary

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relationships. Likewise, this theory can be applied to the relationship between the multi-unit manager and his employees. The multi-unit manager cannot be responsible for and take all decisions in all his units, so he has to assign decision rights to employees. However, he cannot assign all decision rights to his employees, as he has to secure that decisions will be taken in his interest. The interests he pursues as a multi-unit manager may not always be the as the interests of his employees.

2.4. Summary and Introduction of the Sub-Questions

After a critical assessment of the literature on multi-unit franchising and multi-business management in general, it can be said that it does not address the configurational considerations that a multi-unit manager has to make. As a result, a gap in the literature concerning the organisational configuration of the multi-unit franchise business could be identified which this master thesis aims to address. This organisational configuration is essential to regard when building up a multi-unit franchise business and leads to the following sub-questions helping to answer the overall research question:

(a) Organisational Structure

How is the organisational structure of the multi-unit franchise business and what are the motives and reasons for this chosen organisational structure?

(b) Knowledge Sharing across Units

Is knowledge sharing between the different franchise units existent and if yes, how does it take place, in which areas of the business, and what are the motives and reasons for it?

(c) Standardisation

Which tasks are standardised and does the level of standardisation increase with the growth of the multi-unit business?

(d) Centralisation/Decentralisation

Which tasks and responsibilities are centralised and what are the motives and reasons for this centralisation?

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3. M

ETHODOLOGY

This chapter introduces the methodology applied. It is divided into the sections ‘Measurement’, ‘Empirical Setting’, ‘Data Collection’ and ‘Data Analysis’.

3.1. Measurement

To reveal the organisational configuration of multi-unit franchise businesses and the corresponding motives, ten franchisees7_{were interviewed. The goal to build theory and to shed light on an interesting}

phenomenon about which little or even nothing is known so far justifies this qualitative research method using case studies. Thereby a sample size between four to ten cases is appropriate and facilitates the first insight into a topic under investigation as well as the comparison between the different cases (Eisenhardt, 1989b; Thomas, 2004).

The interviews were semi-structured. In this exploratory study it is an effective way of gathering information as it allows for the examination of answers by seeking for explanations or building the forthcoming questions on given answers (Saunders et al., 2009).

Therewith, the chosen research method ensures validity as it answers adequately the research question (internal validity). Nevertheless, as it is only a first step in the research regarding the organisational configuration within multi-unit franchise units and only ten franchisees are considered, the degree of generalisability is restricted (external validity). Therefore, the results need to be confirmed by further studies.

The franchisee is the only person that can be asked about the configuration of his business and his corresponding motives and was consequently chosen as the focus of the research. Thereby it might be possible that the interviewee is not completely honest about his motives as he may try to hide certain reasons or state reasons of which he thinks they are most likely the case, expected by the researcher or known from others. However, the researcher tried to prevent this by informing the franchisee that it is an explorative research where there are no right or wrong answers.

An interview schedule (Appendix 1) was prepared to guide the researcher through the interview and ensure that all the aspired topics are covered. They were derived from the main research question and its sub-questions. However the interview schedule only served as a guideline and the interview developed based on the given answers.

To ensure the alignment with the ethical principles in the conduct of research outlined by the Newcastle University, the interviewees received an information sheet (Appendix 2) and were asked to sign a consent form (Appendix 3) prior to the interview. The interviewee and the researcher went through both documents together to solve possible questions.

7_{In the chapters 3 to 5 the term ‘franchisee’ instead of ‘unit franchisee’ will be used to describe the interviewed}

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3.2. Empirical Setting

According to bfa and NatWest (2011) multi-unit franchising can be mainly found in the hotel and catering sector. Jan Schmelzle confirmed that in Germany multi-unit franchising is mainly prevalent in the food industry. As there is a comparably high amount of possible interviewees and multi-unit franchising is well-known in this industry, this industry was chosen as the focus of research. More detailed, the system catering industry was chosen. A system caterer can be defined as somebody who sells beverages and/or dishes that can be consumed on site and works with a standardised and multiplied concept that is controlled centrally (DEHOGA, 2013).

The top 60 system caterers in Germany were able to raise their annual net turnover in the last years which increased to 9,008 m Euro in 2012. The industry is dominated by McDonald’s with an annual net turnover of 3,247 m Euro in Germany (BdS, 2012).

3.3. Data Collection

Ten franchisees from five different franchise systems were interviewed in German. The franchisees were contacted in different ways:

• Possible interviewees identified through internet research were contacted directly via e-mail or via the German business platform XING;

• A contacted franchisee acted as contact person for other franchisees within his franchise system;

• Jan Schmelzle from the German Franchise Association established the contact between the researcher and either the franchise system or the franchisee directly;

• The franchise system was contacted and acted as a connector to franchisees.

The franchise systems participating in this research are among the top 13 of the most successful system caterers in Germany in 2012 as measured by their annual net turnover (BdS, 2012c). Their annual net turnover as well as the number of owned units in Germany are presented in Table 3.

Table 3: Annual Net Turnover and Number of Units of the Participating Franchise Systems Annual net turnover in

Germany (in m Euro)

Number of units in Germany Franchise system 2012 2011 2010 2012 2011 2010 McDonald’s 3,247 3,195 3,017 1440 1415 1386 Subway 185 175 203 600 612 703 Vapiano 144.8 128.8 103.5 53 45 41 KFC 137 122 103 92 76 72

Joey’s Pizza Service 120 109.5 94.2 203 192 173

Source: BdS (2012c)

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differences, the size of the business and the franchise system. However, to enable comparisons between the franchisees, one industry, the system catering industry, was chosen. As a result, the sold products are relatively comparable and it ensures that an organisational configuration was not only chosen because of the differences in the product offering. The researched franchise systems can be summarized as follows8_:

The first unit of McDonald’s was opened in 1940 by Richard und Maurice McDonald in San Bernardino, California and the first German McDonald’s unit was opened in 1971 in Munich. Today, McDonald’s is the most successful system catering company in Germany as measured by its annual net turnover. On average 2.7 m guests were served by 64,265 employees in 1,440 German restaurants in 2012. While 20% of their units are still operated by McDonald’s Deutschland Inc., 80% were franchised to 243 franchisees. Therewith a franchisee owns on average 4.85 units (McDonald's, 2013). The first Subway restaurant was opened in 1965 in Bridgeport, Connecticut, by Fred deLuca. Compared to McDonald’s that mainly sells burgers and fries, Subway builds its concept on fresh sandwiches. It entered the German market in 1999 in Berlin. Today 6,000 employees serve guests in 600 restaurants. All German Subway restaurants are owned by 350 franchisees (Subway, 2013) which means that statistically nearly half of the franchisees own more than one restaurant.

Vapiano is a German franchise concept that started with its first restaurant in Hamburg in 2002. Today there are 130 Vapianos in 28 countries. In Germany there are 53 restaurants employing about 3,500 people. The concept is described by Vapiano as ‘Fresh Casual Dining’. The guest can order pasta, pizza, antipasti or salads directly from a chef who cooks the dish fresh in front of him (BdS, 2012d; Vapiano, n.d.). The restaurants are partly owned by joint ventures and partly owned by franchisees (Franchise PORTAL, 2011).

KFC was founded by Harland Sanders in 1930 in Corbin, Kentucky. In 1952 he sold his first franchise for a restaurant serving fresh handmade chicken meals. Today there are about 18,000 restaurants in 120 countries (BdS, 2012b; KFC, 2013b; Colonel Sanders, n.d.). There are 92 restaurants in Germany employing about 3,600 people. 70% of the restaurants are franchised (BdS, 2012b; KFC, 2013a). Joey’s Pizza Service was founded in Germany and opened its first shop in 1988 in Hamburg. Today Joey’s is the most successful pizza delivery company in Germany. In 2012, there were 203 franchise businesses nationwide owned by 130 franchisees employing around 5,000 employees (BdS, 2012a; Joey's, 2012).

All of the interviewed franchisees own franchise units in Germany. This ensures a common legislative basis and increases the homogeneity of cultural values that would differ more in cross-country studies and could possibly influence the research results.

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On the consent form the franchisees were able to choose if they want their name to be used in the master thesis. As three franchisees only provided their consent for their data to be used anonymised, this will be done for all to ensure consistency. As a result, the franchisees will be named with a synonym consisting of a letter marking the franchise chain and a number showing the amount of owned units. Both aspects might be of importance when presenting the interview results.

Table 4 summarises the participating ten franchisees, their franchise system, number of units and status9_:

Table 4: Franchise System, Number of Units and Status of the Participating Franchisees Franchisee Franchise system No. of units Status

D3 McDonald‘s 3 Deputy general manager and

son of a franchisee

D8 McDonald‘s 8 Franchisee

D15 McDonald‘s 15 Franchisee

V3 Vapiano 3 Franchisee

J3 Joey’s Pizza 3 Franchisee

K4 KFC 4 Franchisee

K17 KFC, Pizza Hut &

Coffee Corner 17 Franchisee

S3 Subway 3 Franchisee

S5 Subway 5 Franchisee

S11 Subway 11 Franchisee

Source: Interview statements

This sample gives the opportunity to explore different organisational configurations in different franchise systems and for franchisees owning a different number of units. But it also opens up the possibility to compare organisational configurations of franchisees owning a different number of units within one franchise chain and to compare organisational configurations of franchisees owning the same number of units across different franchise systems.

As Table 4 shows, there is one participant that is no franchisee directly. However, the participant grew up with a father owning multiple McDonald’s units and joined the business later on. As there was the initial plan to continue the business in second generation, he had wide-reaching powers and was involved in every area of the business. For these reasons he is an appropriate participant for the research and confirmed that he is able to answer the questions adequately.

3.4. Data Analysis

To systemize the interview information, thematic analysis was used. This widely used method helps with ‘identifying, analysing and reporting patterns (themes) within data’ (Braun and Clarke, 2006, p. 79).

According to Braun and Clarke (2006) the analysis process consists of six steps. The first step aims to get familiar with the data. This includes the full transcription of the audio-taped semi-structured

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interviews10_{and gives the researcher the possibility to review and reread the data in detail several}

times. The second step comprises the coding. ‘Codes identify a feature of the data (…) that appears interesting to the analyst’ (Braun and Clarke, 2006, p. 88). As a result, the qualitative data was manually systematized into meaningful groups, taking into consideration the whole data set. The aim of the next step is to study the codes and assess what potential overarching themes can be developed due to these codes. In this research, codes were developed taking into consideration each sub-question. After this, the themes were reviewed to check whether they shape a logical pattern and represent the codes. Following this, the themes decided on are checked back to see if they are of relevance in relation to the whole dataset. Then the chosen themes were further specified. This step helps to ensure that there is a clear understanding of what a theme comprises, how the relation to other themes is and if there are potential overlaps. Following this the results were written down, thereby using examples that support the findings, relating back to the research question and sub-questions as well as to the literature reviewed (Braun and Clarke, 2006).

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4. R

ESULTS

In the following sections the interview results are addressed, divided into the four sub-topics of the organisational configuration.

4.1. Organisational Structure

To address the first part of the first sub-question regarding the organisational structure of the multi-unit business, the organisational charts of the interviewed franchisees are depicted. Following this, comparisons between the organisational structures will be made.

D3 makes use of an operations manager, unit managers for each unit and a deputy general manager. Figure 7: Organisational Structure of D3

Source: Interview statements of D3

D8 works with unit managers, an operations manager and three supportive employees. Figure 8: Organisational Structure of D8

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D15 works with unit managers for each unit, operations managers, a deputy general manager and four supportive employees.

Figure 9: Organisational Structure of D15

V3 works with unit managers for each of his units.

Figure 10: Organisational Structure of V3

Source: Interview statements of V3

J3 uses nearly the same structure as V3, he is only supported by an additional clerk. Figure 11: Organisational Structure of J3

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K4 employs three unit managers for four units. One of his units is shared with another multi-unit franchisee.

Figure 12: Organisational Structure of K4

Source: Interview statements of K4

K17 owns units from three franchise systems, KFC, Pizza Hut and Coffee Corner with unit managers for each unit, three operations managers and three supportive employees.

Figure 13: Organisational Structure of K17

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S3 owns three franchise units while two are run by a unit manager and one is run by himself. Figure 14: Organisational Structure of S3

Source: Interview Statements of S3

S5 employs unit managers and a supportive clerk.

Figure 15: Organisational Structure of S5

Source: Interview statements of S5

Comparable to D8, he owns one ‘satellite’.

S11 runs his units together with a business partner.

Figure 16: Organisational Structure of S11

Source: Interview statements of S11

They work with operations managers that operate three or five units each without employing unit managers.

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Table 5: Overview of the Organisational Structure of the Multi-Unit Franchise Business Franchi-see Average employees per unit Franchi-see leads units himself? Franchisee works with a partner? Make use of unit manager? Unit manager responsible for how many units?

Make use of operations manager? Operations manager leads unit without unit manager? Operations manager supervises how many units? Make use of deputy general manager? How many supportive employees (clerk, technician)

D3 40 No No Yes 1 Yes No 3 Yes 0

D8 40 No No Yes 1 traditional unit / 1 traditional unit + 1 satellite unit Yes No 6 traditional units + 2 satellite units No 3

D15 40 No No Yes 1 Yes No 5 Yes 4

V3 110 No No Yes 1 No - - No 0

J3 35 No No Yes 1 No - - No 1

K4 25 No Yes,

for 1 unit Yes 1 or 2 No - - No 0

K17 - KFC: 25 - Pizza Hut: 20 - Pizza Hut Express: 8 - Coffee Corner: 3 No No Yes 1 Yes No 3 or 4 No 3

S3 10 Yes, 1 unit No Yes 1 No - - No 0

S5 10 No No Yes

1 traditional unit / 1 traditional unit + 1 satellite unit

No - - No 1

S11 10 No Yes No - Yes Yes 3 or 5 No 3

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Table 5 shows that nearly all franchisees do not lead units themselves but make use of unit managers (except for S3 and S11). K17 is the only one who employs operations managers and still supervises unit managers himself. As an explanation he stated that it is important to stay close to the operational business. This helps him to monitor changes, problems and to spot trends.

The unit managers are responsible for one unit in most cases (except for D8, K4 and S5). To explain why not more units are assigned to one unit manager, one franchisee explained:

‘Leading a unit is a full-time job’ (K4).11

Another franchisee stated:

‘To have two restaurants as unit manager does not work, according to my opinion. Either the unit manager will be totally overchallenged or the task in hand will not be performed reasonably’ (D8).

The main deviation from this finding are D8 and S5 that own ‘satellite’ and ‘traditional’ units with the ‘satellite’ being connected to the management of a ‘traditional’.

K4 has only one unit manager for two units. He always promotes internal staff but for his last unit he was not able to find an appropriate employee. Therefore, one manager is now responsible for two units but simultaneously one employee is trained and it is aspired that he takes over the position as unit manager for the second unit as fast as possible.

Half of the franchisees employ operations managers (D3, D8, D15, K17 and S11) to supervise the unit managers and the operational business. This gives the franchisees more time to focus on the administrative tasks in the backoffice.

The operations managers supervise between three and eight units. D8 assigned most units to his operations manager. When asked if he thinks his one operations manager can handle the workload he answered:

‘Two operations managers (…) is exaggerated in my point of view, not necessary, they just get in each other’s way’ (D8).

Supportive employees are mainly used from the franchisees owning a comparable high amount of units (D8, D15, J3, K17, S5 and S11).

Table 6 is designed to answer the second part of the sub-question referring to the motives and reasons to apply a certain organisational structure.

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Table 6: Overview of the Motives and Reasons for the Chosen Organisational Structure

Franchisee Reasons to employ unit

manager

Reasons to not employ unit manager

Reasons to employ operations manager

Reasons to not employ operations manager

Reasons to employ deputy general manager

D3 Rule from franchisor. -

Advice from other multi-unit franchisee;

Administrative tasks increased consi-derably with third unit contact person for unit managers needed so that the franchisee can focus on administrative tasks.

-

The deputy general manager is the son of the franchisee and it was initially planned that he will take over the units once.

D8 Rule from franchisor. -

Advice from other multi-unit franchisees;

Availability of a suitable employee to fulfil this position; Support needed for high amount of operational and administrative tasks.

- -

D15 Rule from franchisor. -

Took this model over from McDonald’s who supervised 5 company-owned units with one operations manager in the 80s and 90s; Unit managers need close supervision that the franchisee alone cannot perform for 15 units.

-

To have support with tasks on the level of the managing director; To have somebody who can take over the business in case something happens to the franchisee.

V3

A business should not be built solely on one person. There need to be other people who take responsibility also in case the franchisee is not available for some time.

- -

Workload still manageable for the franchisee so he does not see a need to employ an operations manager yet.

-

J3

The franchisee needs to focus on administrative tasks and cannot be in the unit that often anymore. Therefore, he needs one

responsible person per unit to take on responsibility. As a result, he only has one contact person per unit.

- -

The franchisee is currently considering employing an operations manager. As he wants to take a current employee he is waiting for a unit manager who offers to do the job.

Organisational Configuration within Multi-Unit Franchising