Franchising and E-commerce, does that go together?

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Franchising and E-commerce,

does that go together?

A study about the effect of trust and control on franchisees’ responses, as a

result of implementing E-commerce within franchise systems.

Master Thesis

MSc Business Administration

Small Business & Entrepreneurship

Niels Veldkamp

S3796701

n.veldkamp.1@student.rug.nl

University of Groningen

Faculty of Economics and Business

Supervisor: dr. E.P.M. Croonen

Co-assessor: dr. K.M. Bijlsma-Frankema

June 2020

Word count: 14899

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Abstract

E-commerce (i.e. the use of webstores) in franchising has not received many academic attention. However, given the growth potential of E-commerce in franchising and its corresponding challenges for both franchisees and franchisors, it is necessary that this gap in the research is filled. This study investigates the current state of franchisees’ trust in franchisor and perceived control of the franchisor as a result of implementing E-commerce within a franchise system. Besides, this study investigates how this is affecting franchisees’ responses regarding the franchise system by examining four responses to E-commerce implementation. The data were gathered through an interview-based case study on franchisees from one specific Dutch franchise system (BeGreen1_{). I used both my interview data and} insights from the literature of trust, control and EVLN-responses to guide the analysis of this study. Eight one-to-one interviews with franchisees are performed, which result in five propositions regarding the (joint) effects of trust and control on franchisees’ responses, as a result of implementing E-commerce. From a practical perspective, the insights of this interview-based case study result in increased understanding of how franchisor’s management actions lead to a certain level of franchisees’ trust in franchisor (i.e. low or high or distrust), how franchisor’s management actions affect franchisees’ perceived control of the franchisor (i.e. enabling or constraining) and how trust and control jointly influence franchisees’ responses (i.e. exit, voice, loyalty and/or neglect), as a result of implementing E-commerce.

Keywords: Franchising, E-commerce, trust, control, EVLN-responses

1_{Due to confidentiality of this research the name of the Dutch franchise system and all names of the interviewed}

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1. Introduction:

1.1 Trust and control in collaborative environments

In the management literature, trust and control are two of the most studied concepts. Trust and control represent two core instruments that enable successful collaboration between organizational actors, for example in strategic alliances (Coletti et al., 2005). Trust and control are used for managing interdependence and uncertainty within a collaborative environment, such as strategic alliances (Ouchi, 1979). Strategic alliances (e.g. franchise relationships) have been recognized as a field with potential for opportunistic behaviour by partners. As a result, a firm needs to have a certain level of trust in its partner's collaborative behaviour (Das & Teng, 1998) and/or a firm usually controls its partner’s opportunism (Ouchi, 1979). Because of conflicting incentives between members in collaborative environments, collaborations present an important trust and control challenge (Coletti et al., 2005).

The relation between trust and control is complex (Costa & Bijlsma-Frankema, 2007). Several studies demonstrated that trust and control are related to each other. However, the explanations in these studies of how trust and control are related to each other are contradictory (Costa & Bijlsma-Frankema, 2007; Long & Sitkin, 2018). Several studies demonstrated that parties may rely on trust, control or some combination of trust and control to secure collaboration (e.g. Das & Teng, 1998). However, it is unclear how the interrelationships among trust and control ultimately determines collaboration's success (Lin & Sitkin, 2018). A well-known discussion is directed at the question whether trust and control are better conceived as substitutes, or as complementary mechanisms (Bijlsma-Frankema & Costa, 2005).

Trust can be seen as an individual’s willingness to be vulnerable established on positive expectations of intentions or behaviour of another (or organization) (Rousseau et al, 1998). Trust is defined as a psychological state where individuals are convinced that another individual (or organization) will reliably act in its optimum interest (Rousseau et al., 1998). Collaboration includes the sharing of resource responsibility and rewards and the investment of energy and time. This is hard without trust. This sharing creates a situation of interdependence that members of a collaboration will be motivated to avoid, except when these collaborative partners trust each other (Tschannen‐Moran, 2001).

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6 or feel comfortable committing proprietary, valuable resources to the collaboration), and ensuring the effective use of knowledge (e.g. knowledge transfer, high level of knowledge combination and the resulting value creation) in the collaboration (Li et al., 2009).

1.2 Trust and control within franchise systems

Franchising is a meaningful form of entrepreneurship, because in many countries franchising contributes to wealth creation (Blut et al., 2011). A franchisee has a contractual relationship with a franchisor. This relationship consists of a franchisor who owns a business format (i.e. Bruna, HEMA, McDonald’s, PetsPlace) and a franchisee who pays the franchisor for the use of the business format of the franchisor (Cumberland, 2015). In fact, a business format is a way of licensing the rights and obligation to copy a unique positioning of a retailer, with the aim to profitably deal a need for a viable customer segment (Kaufmann & Eroglu, 1999). Furthermore, a franchisee agrees to behave conform the set standards of the franchisor. In this setting, a franchisor acts as “umbrella organization” and the franchisee is part of the system of the franchisor (Gassenheimer et al., 1996). In general, a franchisee has a long-term contractual cooperation with the franchisor. However, the economic motives of the franchisee are usually not aligned with the franchisor’s (Winsor et al., 2012). This could lead to (agency) problems. Franchisees are focussed on their own (individual) profitability, while franchisors aim to maximize system sales (Combs & Ketchen 2003). Therefore, trust and control within a franchise system are very important. Different (economic) motives could lead to tensions within the franchisor-franchisee-relationship, which at the end could lead to negative responses or consequences (Croonen, 2017; Kidwell et al., 2007; Winsor et al., 2012). In case trust is present between franchisor and its franchisees, individuals can collaborate without engaging in self-protective behaviour (Mayer & Gavin, 2005). Besides, most franchisors use control techniques to monitor the franchisees (Dada, 2018) and to manage the franchise system (Mukherjee, 2003). However, some control techniques result in a tension between franchisor's control on one hand versus franchisee's autonomy on the other hand (Paik & Choi, 2007). A franchise system is mostly characterized by the franchisor who has more control than the franchisee (Quinn, 1999). Excessive autonomy of the franchisees could damage the franchisor’s control position. This might lead to the dilution of brand equity and/or a loss of corporate identity (Paik & Choi, 2007). However, misuse of franchisor’s control leads to an unstable relationship and trust could influence the dynamism of this relationship (Pizanti & Lerner, 2003). Therefore, trust and control create an important area of tension within a franchise context.

1.3 Trust and control within franchise systems during change: E-commerce

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7 2017). In this study, E-commerce is defined as an online webstore. This study focuses on a central online channel, where the franchisor is in charge of all E-commerce activities (i.e. a franchisor-controlled webstore). Understanding how E-commerce is implemented in franchise systems is important for several reasons. Nowadays almost all modern businesses, including franchise businesses, have a webstore to meet customer needs (Kaushik et al., 2018). Moreover, franchise businesses can draw some benefits from an effective use of the webstore, as a greater brand awareness, global reach, lead generation, customisation and personalisation (Trinh et al., 2017). Furthermore, some inherent contradictions might arise when E-commerce and franchising are combined (Perrigot et al., 2017).

The implementation of E-commerce in franchise systems can be seen as an important strategic change that has an impact on the franchisor-franchisee-relationship. Besides, it might have an impact on the level of franchisee’s trust in franchisor (Solis-Rodriguez & Gonzales-Diaz 2012) and on the level of control that is possible and needed (Eccles, 2015). Continuing the relationship between franchisor and franchisee may be a problem. Basically, the franchisor that willingly determines to undertake a strategic change, as implementing E-commerce, is potentially jeopardizing the relationship with its franchisees (Lusch et al., 2003). Therefore, franchisees may experience dissonance regarding implementing E-commerce, which might explain their (possible) resistance to E-commerce. For instance, E-commerce could be seen as unfair competition with respect to the exclusive territories of franchisees' physical stores, which has proven to be crucial in franchisor-franchisee-relationships (Emerson, 2010; ING, 2013). Therefore, the implementation of E-commerce could be a source of conflict (Emerson, 2010; ING, 2013). To limit inconsistencies, and thus conflicts, some franchisors will be in charge of all E-commerce activities and therefore control the sales. However, franchisees attach value on their exclusive territory, because franchisees reap the advantages of the performance of the whole unit. Therefore, franchisees are more likely to be resistant to changes that are not profitable or not beneficial to their unit’s performance (Dada et al., 2011). Furthermore, franchisees might take resistive actions to recover their sense of consistency (Lusch et al., 2003). I argue that both trust and control are necessary for an effective E-commerce implementation to face with different challenges and motives between franchisor and franchisee around E-commerce and to ensure consistency within the business format. Moreover, I expect that implementing E-commerce could influence the way trust and control are experienced by franchisees based on how franchisees react to franchisor’s plans around implementing E-commerce and how the franchisor thereafter deals with franchisees' (potential) concerns around E-commerce.

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1.4 Research question

E-commerce in franchising has not received much academic attention. However, given the growth potential of E-commerce in franchising and its corresponding challenges for both franchisees and franchisors (Perrigot et al., 2013), it is necessary that this gap in the research is filled. This study aims to contribute to this discourse and add to theory in theoretical and practical ways. This study examines the role of trust and control in understanding how franchisees respond to E-commerce implementation. The general research question of the study is: “How do trust and control jointly affect franchisee

responses, as a result of implementing E-commerce?”

In this study, I examined the four responses to E-commerce implementation, as a result of franchisee's trust in franchisor and franchisee's perceived control of the franchisor. The lack of previous research regarding the impact of implementing E-commerce within franchise systems forms an important knowledge gap in the current franchising literature. Furthermore, little is known about how franchisees’ trust and control perceptions are related to each other within franchise systems and what the joint effects of trust and control is on franchisee’s responses, as a result of implementing E-commerce.

The main contribution of this study is to address this gap by presenting a case study of the implementation of E-commerce in a Dutch franchise system. The managerial interest of this research is how franchising and E-commerce could go together. Different retailers are wrestling with that question, because of different opinions from franchisors and franchisees about the distribution of costs and revenues of the webstore (Perrigot et al., 2017). The goal of this study is to bring the discussion about how E-commerce fits within franchise systems a step further by identifying (key) implications relevant for both theoretical and managerial interest on trust, control and EVLN-responses within franchise systems.

2. Literature review:

2.1 Conceptual background and explanation of the studied concepts

2.1.1 Introduction to the conceptual model

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Figure 1: Conceptual model.

2.1.2 Explanation of the conceptual model

Firstly, this study investigates the effect of franchisor’s management actions on franchisee’s trust in franchisor. Franchisee’s trust means that a certain franchisee trusts its franchisor (e.g. individuals such as franchisor representative and/or the whole franchise system) within a franchise system (Croonen, 2017). Secondly, the effect of franchisor’s management actions on franchisee’s perceived control is investigated. Franchisee’s perceived control of the franchisor (i.e. enabling or constraining) is in this study defined as the belief that a certain franchisee could determine its own internal state and behaviour, influence someone else its environment, and/or bring about desired outcomes (Wallston et al., 1987). Thirdly, the relation between trust (i.e. franchisee’s trust in franchisor as a result of implementing E-commerce) and control (i.e. franchisee’s perceived control of the franchisor as a result of implementing E-commerce) is investigated. Finally, the joint effect of trust and control on franchisee responses, as a result of implementing E-commerce is investigated. Franchisee’s responses are in this study divided in the following two dimensions: constructive (i.e. loyalty and voice) and destructive responses (i.e. exit and neglect) (Croonen & Brand, 2015).

2.2 The role of trust and control within a collaboration

Scholars have focused on the issues of trust and control, because trust and control both contain elementary building blocks of collaboration between organizational actors (Long & Sitkin, 2018). Several studies demonstrated that parties may rely on trust, control or some combination of trust and control to secure collaboration (Das & Teng, 1998; Ouchi, 1979). When individuals trust the actors that apply and enforce controls, these individuals believe that their interests and values of the authorities are shared (Lin & Sitkin, 2018). As a result, a high level of motivation, commitment, collaboration and performance will be reached. (Bijlsma-Frankema & Costa, 2005). In the literature, there is some agreement that trust enables cooperative behaviour (Rousseau et al., 1998). However, the (joint) effects of trust and control on franchisees’ responses or intentions of another is not clear yet.

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10 (Coletti et al., 2005). Collaborations are originated because of the belief that there are gains from working together and from sharing information (Coletti et al., 2005). While collaborations provide several benefits, collaborations are also quite unstable (Das & Teng, 1998). Collaborations are vulnerable, because of the probability that collaboration goals will not be achieved despite the full collaboration of the partners or due to a lack of collaboration between the different partners. The trouble of measuring individual contributions to collaborative outcome causes an incentive for opportunistic behaviour, as collaborators are enticed to withhold information or even free-ride (Coletti et al., 2005). Moreover, collaboration is doomed to fail in case all collaborators behave in this way (e.g. withhold information or free-ride).

Within a collaboration, a party has to have sufficient confidence in partner collaboration (i.e. the other party) to satisfy and succeed the collaboration (Das & Teng, 1998). Confidence in the other party is defined as the “perceived level of certainty that its partner firm will pursue mutually compatible interests in the alliance, rather than act opportunistically” (Das & Teng, 1998. p.491). So, confidence in the other party is linked to concerns about its partner’s opportunistic behaviour. The sense of confidence comes basically from two sources: trust and control (Das & Teng, 1998). Based on that, I decided to consider trust and control in parallel in this study.

2.2.1 The trust-control relationship

Although both trust and control might be connected with EVLN- responses in partner collaboration, the current literature is unclear and inconclusive about the relation between trust and control (Bijlsma-Frankema & Costa, 2005; Costa & Bijlsma-(Bijlsma-Frankema, 2007; Long & Sitkin, 2018).

Some previous studies (e.g. Long & Sitkin, 2018) indicate that trust and control (i.e. contracts) produce complementary (and positive) results on the performance within a collaboration, such as: satisfaction and reduced opportunism. In these observations, the interaction between trust and control “enables each type of component to influence individuals’ attitudes and responses more significantly that it could without reinforcement from the others” (Bendersky, 2003: 644). The key question here is what the effect is on partners’ responses (i.e. franchisees) within the collaboration between franchisor and franchisee. Other studies indicate that trust and control (i.e. contracts) could be understood as substitutes and produce negative results on the performance within a collaboration (e.g. Mellewigt et al., 2007). In this case, detailed contracting might reduce the level of trust within a collaboration. In other words, a rise of detailed contractual complexity (i.e. complexity within the contract) might be viewed as controlling under a low level of trust, while under a high level of trust it might be viewed as enabling coordination (Mellewigt et al., 2007).

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11 complements and reinforce each other (e.g. Long & Sitkin, 2018 or Poppo & Zenger, 2002). The complementary relation between trust and control is: trust and control can mutually strengthen each other and contribute to the degree of collaboration needed in a relationship (e.g. Lin & Sitkin, 2018). This is about combining trust and control in a way to emphasize or enhance the quality of each other. For instance, control mechanisms might increase trust by providing people (i.e. franchisees) with objective rules and well-defined measures on which to base their evaluations and assessment of others (Bijlsma-Frankema & Costa, 2005).

Since significant progression has been made in the direction of reconciling some of the broader aspects of the complement–substitution discussion (Mellewigt et al., 2007), this study mainly focuses on how people (i.e. franchisees) within a collaboration react (i.e. responses), as a result of the level of franchisee’s trust in franchisor and franchisee’s perceived control of the franchisor within the franchisor-franchisee-relationship. The following paragraphs discusses this further.

2.3 Franchising and the role of trust and control

Franchising is in this study defined as a form of entrepreneurship that involves collaboration among two various types of actors; franchisees and franchisors (Kaufmann and Eroglu, 1999). As already mentioned in the introduction, a franchisor and its franchisees have different economic motives. Due to different economic motives between franchisor and franchisees, goal conflicts such as opportunistic behaviour of franchisees might arise and could lead to tensions in the franchisor-franchisee-relationship (Barthélemy, 2008). The franchisor-franchisee-relationship could be damaged by a franchisee's choice to engage in opportunistic behaviour by free riding on franchisor’s brand reputation. Opportunistic behaviour and tensions within the franchisor-franchisee relationship could lead to agency problems and at the end it may lead to negative outcomes and responses, such as conflicts between franchisor and franchisees or even franchisees that leave the franchise system (Croonen, 2017; Kidwell et al., 2007).

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12 & Deci, 2005). Many studies argue that autonomous motivation (i.e., integrated extrinsic motivation and intrinsic motivation) enlarges heuristic performance, trust, commitment, satisfaction, and wellbeing (Gagné & Deci, 2005).

Control is the most important aspect of managing a franchise system (Mukherjee, 2003). The intention of the franchisor is to maintain control over their franchisees that operate decentralized activities at various locations. However, a large amount of franchisor's control and the resulting reduction of franchisee's entrepreneurial autonomy might lead to dissatisfaction of franchisees or even non-collaborative behaviours in franchisees (Dada, 2018). In the time franchisors deal with the issue of control, franchisees regularly try to attain a certain level of autonomy (Paik & Choi, 2007; Pizanti & Lerner, 2003). Excessive autonomy undermines franchisor’s control and authority, and could lead to the dilution of brand equity and/or a loss of corporate identity (Paik & Choi, 2007), while tight controls are very unpopular with franchisees. A lot of franchisees decide to become a franchisee, because of being independent and being able to achieve self-fulfillment (El Akremi et al., 2011). I suggest that the relationship between franchisor and franchisee deteriorate because of control, since a high degree of control decrease mutual trust between partners (Phan, Butler & Lee, 1996). I expect that franchisees initially opt for a lot of support from the franchisor (and thus control), but once a franchisee is experienced, the tension between control and the loss of autonomy becomes stronger (Blut et al., 2011; Dada, 2018).

2.4 E-commerce within franchise systems and franchisees’ responses

Change is critical for organizations to survive in highly-competitive environments. Besides, no business or organization would survive over the long-term without reinventing itself to meet the changing market and world around it (Rainio, 2014). Nevertheless, the success of change, such as implementing E-commerce within a franchise system, largely depends on the response of a franchisee to the suggested change (Piderit, 2000).

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13 webstore in franchise systems can be seen as business growth from a franchisor's perspective, because a webstore ensures for a wider geographical reach of customers without respecting any territorial boundaries (Emerson, 2010). This is legally permitted, since a webstore is not seen as active sales (Emerson, 2010; ING, 2013). However, from a franchisee’s perspective, implementing a webstore in franchise systems can be seen as cannibalisation (e.g. intrabrand competition), which means improving the franchisor's results and expanding the network of customers at the expense of their longstanding franchisees (Perrigot et al., 2017). Therefore, franchise systems are faced with challenges when E-commerce has been implemented that non-franchised counterparts did not encounter (Perrigot et al., 2017). Some franchise systems adopted ill-considered E-commerce strategies which resulted in a litigation between franchisor and franchisees at the end (i.e. Bruna and Albert Heijn) (FD, 2018). Some franchisees of Bruna left the organization, since the franchisees had to advertise in their store for a webstore, while they did not earn anything from this webstore (FD, 2018). The same applies for Albert Heijn. In 2016, 220 franchisees of Albert Heijn claimed their share of groceries delivered at home and some of them started their own webstore (FD, 2018). Franchisees' concerns could be potential barriers for effectively implementing E-commerce and might lead to a lack of trust in the franchisor (Solis-Rodriguez & Gonzales-Diaz 2012) and has an impact on the level of control that is possible and needed (Eccles, 2015). Implementing E-commerce lead to new revenues, costs and activities for both franchisor and franchisee (ING, 2013) that might not be beneficial to franchisee's own profits or the performance of the whole unit (Dada et al., 2011). This may lead to conflicts and at the end to unsatisfied members within the franchise system (Dant & Nasr, 1998). Another reason why conflicts might arise is because of issues concerning uniformity (e.g. product and price inconsistencies) between franchisor-controlled webstore and franchisees' physical store (Perrigot et al., 2013).

Since relationship satisfaction is important for success in franchise systems (Morrison, 1997), researchers emphasize the importance of relationship management for franchisors to encourage positive franchisee responses and attitudes, such as trust, compliance, intent to remain or commitment and suppress negative results, as conflicts, free riding or exits of franchisees (Kidwell et al., 2007). When franchise partners (i.e. franchisor and franchisee) trust one another, these partners have positive expectations about the behaviour of each other. As a result, these partners are willing to be vulnerable to the actions of the other party. This makes conflicts less likely to occur (Mayer et al., 1995). Considering the inherent contradictions of franchisee and franchisor regarding implementing E-commerce, the willingness of a franchisee to be vulnerable to the actions of its franchisor and thus trust the franchisor is important, because it leads to higher satisfaction, performance and to fewer conflicts and exits (Davies et al., 2011; Kidwell et al., 2007).

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14 focus on reviving or maintaining a relation (i.e. loyalty and voice), while destructive reactions focus on ending or destroying the relation (i.e. exit and neglect). First, exit is equivalent to giving up franchise ownership voluntary and is often seen as uniquely powerful response, because it usually means that the franchisee believes that the situation is unlikely to improve (e.g. Hirschman, 1970). Franchisees may either leave their current franchise system and transfer to another organization or stop as franchisee in general. Second, voice is defined as "any attempt at all to change rather than to escape from an objectionable state of affairs" (Hirschman, 1970, p. 30). Basically, voice involves appeals to the franchisor. However, it could also involve other protests and actions. Third, Hirschman (1970, p. 38) defines loyalty as "suffer in silence, confident that things will soon get better". In case franchisees are confronted with deteriorating circumstances, some franchisees might choose neither exit nor voice. In fact, franchisees stick with their franchisor for a period before responding to a problem, if at all. Loyalty might be a transitory form of response that gives way to other responses in case a certain situation continues (Hirschman, 1970). Fourth, neglect refers to franchisee silence and inaction (Rusbult et al., 1988). There is talk of neglect if franchisees doing nothing about their situation. Neglect is different from loyalty, because neglect is not directed at recovery of the relationship (Rusbult et al., 1988). A franchisee might choose to put less time and less effort in a relationship in case a recovery is not going to happen.

In this study, I examined the four responses to E-commerce implementation, as a result of franchisee's trust in franchisor and franchisee's perceived control franchisor. I did this by examining what alternative (franchise) jobs are available to franchisees (exit), whether franchisees thought improvement is likely (voice), how committed franchisees are to the franchisor and peers (loyalty) and whether franchisees thought there is much connection between what franchisees do and what happens to franchisees (neglect).

3. Methodology:

3.1 Case study research

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15 existing webstore, their strategic aim of focusing on omnichannel and their ambition to grow in terms of online sales. Case data was developed from qualitative research data through interviews and observations. This study involved 8 one-to-one interviews with franchisees of BeGreen. Since the 8 franchisees participated anonymously, the name of the participants nor the name of the retail organization or the locations are not be mentioned in this report. Therefore, a pseudonym name for the franchise system (i.e. BeGreen) and pseudonymous letters are used (i.e. Franchisee A, B, C, D, E, F, G and H).

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3.2 Case study design

The case study of this research consisted of five phases (see figure 2).

Figure 2: The 4 phases of my case study

The first phase focused on the case study itself to address the “how” question of this study. The interview-based case study consisted of 8 one-to-one interviews with franchisees. The one-to-one interviews lasted between 60 and 90 minutes on average per interview. The interviews were taped, transcribed verbatim (phase 2), and together with observations (based on field notes during the interview) and personal conversations with the 8 franchisees entered into a qualitative datamatrix (phase 3). The qualitative datamatrix listed all the respondents in the columns and the topics in the rows (Miles & Huberman 1984). Thereafter, the interviews were analyzed. In phase four, the data was axial coded into a table. The axial coding tables listed all the relevant franchisee’s responses in the rows and the topics (e.g. trust, control and EVLN-responses) in the columns. From there on, the data was ready to be analyzed. After I had coded the data, I investigated whether some overarching themes could be developed (phase 5) (Yin, 2015). After that, the outcomes of the practical research were compared with the literature (based on SMEs in general) to see whether there were some similarities or differences with current literature.

3.3 Quality criteria of case study

It is important to meet the case study quality criteria of reliability and validity, since it provides a basis for inter-subjective agreement on research outcomes (Yin, 2015).

In case of reliability, biases should be avoided (e.g. instrument-, researcher-, respondent- and situation biases) to be sure that the outcomes are independent of certain characteristics and could be replicated in other studies (Yin, 2015). Instrument reliability is pursued by taking into consideration multiple data collection instruments. This includes 8 one-to-one-interviews and the observations by visiting these franchise stores. So, triangulation (Yin, 2015) is present by combining various research instruments. With regard to researcher biases, regular meetings and e-mail contact with both supervisors and five fellow students to discuss each other's outcomes and observations (i.e. inter-researcher discussions) had to make sure that the outcomes are independent and thus prevented a researcher bias. (Eisenhardt, 1989). By using snowball sampling, I was able to interview a more diverse group of franchisees. Some of these (more critical) franchisees would not participate in my research in advance, while on the advice of peers these (more critical) franchisees were also willing to participate in my study.

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17 This has contributed positively to the respondent reliability, since I gained more insight in diverging opinions of franchisees what increases the respondent's reliability. Finally, the interviews were held in February and March 2020 at different moments to prevent situation bias.

In case of validity, results should be justifiable by the way they are generated to believe that the results are true. Validity is divided into: construct-, internal-, and external validity (Yin, 2015). Construct validity is the degree to which a measuring instrument measures what is intended to measure (Eisenhardt, 1989). The case study was setup together with both supervisors and five fellow-students and reviewed together to make sure that the measured instruments measure what is intended to measure. Internal validity is about the completeness and justification of findings and conclusions about the relations with the case study outcomes (Eisenhardt, 1989). To achieve this, datamatrix tables and axial coding tables are used to structure the interview data, so that I had a clear overview of the outcomes in a consistent non-conflicting way. Finally, external validity is about the degree to which the findings are generalizable to other situations (e.g. other individuals/franchisees, organizations, countries) (Eisenhardt, 1989). This case study focuses on just one franchise-organization. Therefore, it is hard to draw general conclusions. This research should be seen as a starting point for future studies, since little is known about how trust and control perceptions are related to each other within franchise systems and what the joint effects of trust and control is on franchisees’ responses, as a result of implementing E-commerce.

4. Results/Case study analysis:

4.1 Description of the data

4.1.1 General

In table 1, an overview of the 8 respondents can be found (i.e. Franchisee (SEE) A, B, C, D, E, F, G and H). Fran-chisee (SEE) Franchising experience at BeGreen; prior experience # of units owned at system X Fulfilled and unfulfilled expectations

Success and failure factors Franchise advisory council (FAC) representative; yes or no?

SEE A Franchisee since 1996; before 1996 he was manager of a company-owned store at system X.

2 units. Fulfilled: develop his own plans. Unfulfilled: being in charge of his staff. Success: well-known brand name. Failure: E-commerce.

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18 SEE B Franchisee since

2015; before 2015 he was manager of a company-owned unit at system X.

1 unit. Fulfilled: having the freedom as entrepreneur. Unfulfilled: no. Success: well-known brand name. Failure: E-commerce. No.

SEE C Franchisee since 1998; before 1998 she worked in a

department of system X.

1 unit. Fulfilled: contact with the customer. Unfulfilled: no. Success: customer service. Failure: poor communication. No.

SEE D Franchisee since 2008; before 2008 he was manager of a company-owned unit at system X. 1 unit, but from next year 2 units. Fulfilled: challenge: the excitement and drive that it is your own store. Unfulfilled: no. Success: customer service and -friendliness. Failure: E-commerce. No.

SEE E Franchisee since 2008; before 2008 she worked outside system X.

1 unit. Fulfilled: being your own boss, freedom. Unfulfilled: no. Success: the location. Failure: E-commerce. No.

SEE F Franchisee since 2005; before 2005 he was manager of a company-owned unit at system X.

1 unit. Fulfilled: store’s (financial) results Unfulfilled: no.

Success: local involvement and customer loyalty. Failure: other stores of system X.

No.

SEE G Franchisee since 1995; before 1995 she was manager of a company-owned unit at system X.

1 unit. Fulfilled: the purchasing is arranged, the advertising is arranged and much more is arranged by system X.

Unfulfilled: no.

Success: customer loyalty.

Failure: other stores of system X.

No.

SEE H Franchisee since 1996; before 1996 he was manager of a company-owned unit at system X.

2 units. Fulfilled: store’s (financial) results Unfulfilled: no.

Success: the assortment.

Failure: other stores of other systems.

Yes, he is a board member.

Table 1: Overview of the general questions.

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19 into the franchise ownership, because they were either already involved in BeGreen (e.g. manager at a company-owned store) or because of family circumstances (children taking over their parents' store or an inheritance).

The most important expectations of being a franchisee were: freedom (i.e. being your own boss), challenge (i.e. the excitement and drive that it is your own store, that a franchisee has invested its own money in the store and that the result is ultimately your own), having the responsibility, developing plans (i.e. with a different view than a salaried job) and customer contact. These expectations are fulfilled. Since almost all franchisees were already involved in the organization, the expectations matched reality. They knew in advance, what they were going to do. Therefore, there are no negative outcomes (e.g. unfulfilled expectations). Furthermore, the franchisees like that they are affiliated with an organization, because in any case the purchasing is arranged, the advertising is arranged and much more is arranged by an organization. This makes franchisee’s entrepreneurship easier, because it saves a franchisee time and because there are economies of scale. Some of the franchisees are even thinking of opening a second store or renovating the existing store.

The success factors for the financial success of franchisee's stores are: knowledge, skills, assortment, customer service, customer-friendliness, customer loyalty and the location. These factors are important for the franchisees, because customers can buy the products anywhere, and perhaps cheaper (e.g. internet) or sometimes more expensive. However, the point is that customers also want the products from franchisees' stores, because the franchisees provide customers with honest advice and service. Furthermore, customers appreciate it that they can always contact franchisees (or personnel) with their questions. So franchisees must rely on their service and expertise rather than price. In addition, local connection is important, because customers know franchisees and their employees. That is important, because customers are also recognized.

4 franchisees mentioned internet and in particular webstores in general as a failure factor for the financial success of franchisees’ stores, since it is very easy to find a product for a lower price online. Another factor is competition (both from BeGreen and other franchise systems) and the risk that new stores of competitors will be added near a franchisee. So customers could quickly switch to another store that is not owned by the franchisee or by the franchise system. Moreover, (changing) government rules is a failure factor. In case the government decides to prohibit the sale of certain products (e.g. fireworks), a franchisee lost turnover. Furthermore, poor communication skills towards customers, peers, franchisor or employees is a failure factor. This could be a problem, because due to miscommunication some promises cannot be kept.

4.1.2 Franchisor’s management actions affecting trust and control

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important, so you know what the plans of the organization (i.e. franchisor) are and whether those plans still match the wishes you have as an entrepreneur (i.e. franchisee)" (SEE G).

4.1.2.1 Franchisor’s management actions affecting trust

In table 2, an overview of franchisor’s actions affecting franchisees’ trust in franchisor can be found. Per franchisee, the most important franchisor’s action is given that affects franchisees’ trust in franchisor.

Franchisor’s actions affecting trust:

1. Commitment of franchisor (SEE A). Perception: (+).

2. Store visits of Retail manager (from franchisor’s side) once every six weeks where franchisor and franchisee can conversate about success and fail factors (SEE B). Perception: (+).

3. The franchise fee has become more transparent by engaging an independent agency, which made it more insightful to understand how the franchise fee is structured (SEE C). Perception: (+).

4. The franchisor approached a franchisee to open a second store, because the franchisor thinks this franchisee is par excellence the franchisee who can do this (SEE D). Perception: (+).

5. Franchisor offers a guarantee on (bank) loans (SEE E). Perception: (+).

6. The way of managing which leads to positive (financial) results of the franchise system, franchisor’s knowledge around articles/assortment and how to sell these articles to customers (and advice

customers) (SEE F). Perception: (+).

7. Development of good plans, but the elaboration does not always go well (SEE G). Perception: (+/-). 8. Arrival of a new management board that developed a clear vision (SEE H). Perception: (+).

Table 2: Overview of franchisor’s actions affecting trust. + means a positive effect of franchisee’s trust in franchisor, +/- means a moderate effect of franchisee’s trust in franchisor and – means a negative effect of franchisee’s trust in franchisor.

Franchisees’ trust in franchisor is relatively high (SEE A, B, C, D, E, F & H). “Trust has developed over

the years through mutual involvement” (SEE A). “The system performs well every year” (SEE B) and

“the system makes good headlines” (SEE F). Furthermore, franchisees are treated with respect and neatness by the franchisor which contributes to franchisees’ trust. As a result, franchisees feel mutual trust. “Mutual trust contributes to franchisee’s business operations” (SEE C). However, one franchisee notes that the franchisor does not always provide all the information with the franchisees (SEE G). "At

those times, the franchisor should be more honest to the franchisees and do not pretend that the franchisor knows nothing about it" (SEE G). In such a situation, trust declines. However, none of the

franchisees distrust the franchisor.

Moreover, all franchisees have the feeling that they are trusted by the franchisor as well. How franchisees noticed this, differs per franchisee. "I noticed that in the way how the franchisor speaks to

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21 The positive contribution of the franchisor is that the franchisor has a lot of knowledge (e.g. how to distinguish yourself in the market) and power (e.g. purchasing and thus economies of scale) that franchisees do not have. However, franchisees perceive also some negative contributions of their franchisor. A franchisee identified that the system did not make any progress and the system did not develop further a certain period (SEE A). Other negative influences are in case of delivery problems (SEE D), incorrect stocks (SEE C & F), incorrect communication (SEE F) or if no action is taken against products which are not profitable (SEE A).

4.1.2.2 Franchisor’s management actions affecting control

In table 3, an overview of franchisor’s control actions affecting perceived control of the franchisor can be found. Per franchisee, the most important franchisor’s action is given that affects perceived control of the franchisor.

Franchisor’s actions to control franchisees:

1. Franchisor is able to see all figures around stocks in store because of automated inventory control systems work by scanning a barcode either on the item (SEE A). Perception: (+ until +/-).

2. Store visits of Retail manager (from franchisor’s side) once every six weeks (SEE B). Perception: (+). 3. Franchisor is able to see all annual figures of franchisees (SEE C). Perception: (+/-).

4. Franchisor is able to see all revenue figures of franchisees (SEE D). Perception: (+ until +/-).

5. Franchisor could see all the numbers on a daily basis (e.g. how many products are sold in franchisee’s store) (SEE E). Perception: (+/-).

6. Franchisor is able to see how franchisees communicate online via social media channels (SEE F). Perception: (+).

7. Mystery shopper (SEE G). Perception: (-).

8. Because everything goes via the cash register system, the franchisor is able to see what kind of products franchisees sell and how many of both: from the franchisor and from other external suppliers as well (SEE H). Perception: (+).

Table 3: Overview of franchisor’s control actions. + means franchisor’s control action is perceived as agreeable by franchisee, +/- means franchisor’s control action is perceived as neutral by franchisee and – means franchisor’s control action is perceived as bothersome by franchisee.

Franchisees feel free as an entrepreneur. Therefore, franchisees do scarcely perceive control actions of the franchisor (see table 3) as bothersome. Only a mystery shopper can be perceived as bothersome in case a franchisee is in a phase of change (e.g. the franchisor wants that the franchisee change its store a little faster than franchisee thinks he can realize that). In addition to the control actions of table 3, the franchisees have a contractual relationship (i.e. control) with their franchisor. All the franchisees are happy with their franchise contract. "The contract is fine, because it is not that hard franchise that much

is forbidden or that it is not allowed to do anything else. I feel free as an entrepreneur" (SEE F). Most

of the franchisees do not know what is exactly in the contract. However, franchisees do not see this as a problem. "I will take the contract with me in case of a conflict, but I have not yet experienced that" (SEE B). One franchisee did not have a contract for 10 years, because "the franchisor probably forgot to make

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22 Positively perceived contract rules are: system expressions (e.g. layout of the stores) (SEE C & H), purchasing (e.g. freedom to purchase partly from other suppliers) (SEE E), marketing (SEE E & H), advertising campaigns (i.e. no advertising opportunities of peers in each other's exclusive territory) (SEE E), cash register system (SEE F), the webstore (SEE F) and human resources rules and -regulations (SEE D & H). "The franchisor helped me with these things and these things are stated in the franchise

contract" (SEE F). Also, the franchisor helps its franchisees in case of a business takeover. “Thanks in part to our FAC, a franchise point of sale remains available for a new franchisee if a current franchisee quits” (SEE A). Most of the franchisees perceived no negative contract rules (SEE A, B, C, E, F & H).

However, one franchisee mentioned that there are strict rules of what you purchase from other suppliers (e.g. maximum of 5-10% of franchisee’s assortment could differ from franchisor’s assortment) (SEE D). “Sometimes, I perceive this as too strict, because I see that some of my customers have a need for a

certain product. However, I could not offer them this product, because I did not want to break the 5-10% rule” (SEE D).

4.1.3 Trust and control during change

Franchisee's trust in the franchisor has moved back and forth due to changes. In the last couple of years, there have been many management- and personnel changes on the franchisor's side. As a result, the franchisor set out policies what has set out before and did not work out. "The franchisees had to warn

the franchisor and steer the franchisor in the right direction" (SEE H). “It is not franchisees' intention to sit on the franchisor's chair. However, franchisees will ensure that everyone goes into the same and right direction” (SEE H). Shareholder-, management- and personnel changes has influenced the

relationship with the franchisor. On some points, the relationship has intensified with a number of people on franchisor's side. “These people have been working there for a very long time and they know how it

was during the years 2000-2010" (SEE A). The changes (e.g. shareholder-, management- and personnel

changes) did have an effect on franchisees’ stores. "Not everything went as it should" (e.g. supplying the stores) (SEE B). However, franchisees’ trust in franchisor has improved recently. Especially, “since

a new management board with a clear vision arrived” (SEE A & H) and “the franchise fee became more transparent” by engaging an independent agency, which made it more insightful to understand

how the franchise fee is structured (SEE C). The franchisees also fought to gain more transparency and more control through the FAC. And the franchisees succeeded and got more transparency and more control (SEE E). Therefore, franchisees’ trust in franchisor is high.

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retail manager will visit franchisees' stores more often, so then there will be more control in the future"

(SEE E). Franchisees accept these changes, because “you have to show the intention to meet the

agreements” (SEE A). The franchisor acts well in the opinion of the franchisees (SEE A, B, C, D, E, F

& H). “If someone does not want to work in accordance with his/her contract, you should not join a

system as a franchisee” (SEE C).

4.1.4 Franchisees’ responses to franchisor in general

Almost all franchisees decide to talk to their Retail manager (franchisor) first in case of unpleasant influences. "I discuss or report unpleasant influence with the Retail manager or one of my other

connections" (e.g. FAC) (SEE A). Sometimes franchisees achieve their goal by discussing unpleasant

influences with the franchisor. However, sometimes franchisees do not achieve their goal and decide to change their behaviour. "If we believe that the fault is not ours, we will draw up our own plan" (SEE C), while other franchisees sometimes "accept that the franchisor has the last word" (SEE E).

The retail manager points possible improvements out to franchisees about how to improve their business operations, such as the layout of the store, presentation of products in the store or showing revenue forecast. All franchisees are open to get advice on possible improvements. However, how franchisees deal with possible improvements depends. In case franchisees disagree with the franchisor, they report this to the franchisor. "I often start the conversation first and then we will see who is right

or we try to substantiate it with figures to investigate whether it is actually the case" (SEE D).

Franchisees are not always loyal to franchisor's advice. Franchisees mainly choose to interact with the franchisor (SEE A, B, C, D, E, F, G & H). If franchisees cannot substantiate a possible improvement with numbers, they usually opt for neglect and franchisees get away with that because the franchisor is usually not that strict and so no penalty or consequence is imposed (SEE A, C & G) and sometimes for loyalty as response (SEE E & H).

Only one franchisee has considered giving up franchise ownership, because of its relationship with the franchisor, because this franchisee does not feel fully understood and supported by the franchisor (SEE G). "If the franchisor says to me: you do not change fast enough, it might be that I exit

BeGreen. In that case, I have Plan B ready, because we do not get the understanding from the franchisor that we cannot change that quickly in our situation" (SEE G).

The franchisees also fought to gain more transparency and more control through the FAC and succeeded (SEE E). Via the FAC, the franchisees have gained a larger voice and therefore more say. This change has a positive influence on firm success. The franchisees are better heard by the franchisor now. However, not as individual, but as FAC. As a result, the franchise fee has changed. "There was

always a feeling from the franchisees that the franchisor was making too much money from the franchisees" (SEE C). That is why the franchise fee has been reduced in favour of the franchisee.

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24 assortment. As a result, the range has become less breadth and more deep. This change led to revenue growth of franchisees' stores (SEE D).

4.1.5 Franchisees’ experiences with the webstore and their influences on franchisees’

trust in franchisor, perceived control of the franchisor and franchisees’ responses

4.1.5.1 Franchisees’ experiences with the webstore

The introduction of the webstore has not changed the relationship with the franchisor, but the introduction cost franchisees a lot of energy. "We have the combination with the physical store. The

physical store is the strength and the webstore is just a side business. It is not our intention to become a bol.com, for example" (SEE A). "The webstore works properly" (SEE C). Furthermore, franchisees

receive help from the franchisor, for example to realize Wi-Fi in the store. That is experienced by franchisees as very pretty. All franchisees consider the (franchisor-controlled) webstore as an opportunity. "The webstore keeps us going between other webstores" (SEE G). Furthermore, the webstore is widely used by consumers to check store stocks. Also, "the product range has been

extended" (SEE A). Sometimes, franchisees earn some money (e.g. home delivery) without doing

anything for it. All franchisees experience the webstore as positive, because “many people want to hold

and see a product physically and get some explanation about a product before they buy it" (SEE G).

However, "many consumers inform themselves online by reading product reviews. That is why we need

a webstore as well" (SEE G).

However, the franchisees also experienced a number of negative aspects. "I prefer customers

who are able to pick up a product in my store rather than customers who choose for home delivery, because without the webstore, these customers would have bought in my store" (SEE E). Franchisees

receive the full amount if the consumer pick up their order in franchisee's store. In case of home delivery, franchisees only receive commission from the franchisor of online customers who live within franchisees’ exclusive territory (i.e. a certain zip code), while franchisees do not receive anything in case customers live outside franchisee’s exclusive territory. Some franchisees think they lose money because their exclusive territory is larger than a certain zip code that the franchisor has determined. Therefore, these franchisees do not receive commission from the franchisor of online customers who live in a nearby zip code outside their exclusive territory. However, the franchisor thinks that franchisee’s current exclusive territories are the right ones. Another criticism is the return policy, because "consumers could return a product to a franchisee's store, but thereafter a franchisee cannot

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25 webstore as an opportunity, because of its underlying strategy and the link with the physical stores (e.g. store stocks).

4.1.5.2 Franchisees’ trust in franchisor and perceived control of the franchisor as a result of implementing the webstore

Franchisees' trust in franchisor regarding how the franchisor deals with the webstore is slightly lower than franchisees' trust in franchisor in general. A reason is, because "the franchisor does not always fulfil

promises made to the customer" (SEE E) (e.g. next day delivery). As a result, customers complain about

this to franchisees as well and expect that franchisees will solve this. The reaction of franchisees is that they usually try to find a solution for the customer to make the customer happy and later on address this to the franchisor. Furthermore, franchisees report things of improvement, such as offering a broader range of products. In franchisees opinion the franchisor "should get more out of the webstore" (SEE D) by investing in knowledge and skills regarding E-commerce.

Moreover, franchisees do not perceive any extra control of the franchisor as a result of implementing E-commerce in addition to the franchisor’s control actions mentioned in table 3 in paragraph in 4.1.2.2. Because franchisees receive help regarding E-commerce from the franchisor, introducing a webstore did not affect the franchisor-franchisee relationship.

4.1.5.3 What franchisees want to change regarding E-commerce

Franchisees want a wider range of products, linking all items from the store to the webstore, faster delivery, better internet speed in the store (for using the kiosk) and the franchisor should continue investing in Brick & Click. "The kiosk in the store does not have much added value yet, because all the

products offered in the webstore are available in franchisee's store. Therefore, the franchisor should add extra products from our suppliers that are not in our stores yet. So we could offer our customers some extra products in our store via our kiosk" (SEE H). Franchisees say these kind of improvements

to the franchisor. Besides, franchisees have the idea that the franchisor take this feedback well. “I have

trust in how the franchisor deals with franchisee’s feedback regarding E-commerce” (SEE B). However,

“the franchisor may work a bit faster to process franchisee’s feedback” (SEE D). Also, there are some discussions among franchisor and franchisees about when to receive commission from the franchisor of online customers (i.e. which zip codes) and how much. Currently, some franchisees would not recommend customers to choose for home delivery in case a product is out of stock in franchisee’s store and a customer must order the product online (i.e. via the kiosk in franchisee’s store). “If a customer

picks up a product at my store, I can earn more than when a customer prefers home delivery. Therefore, I use some selling-arguments” (SEE C).

4.1.5.4 Franchisees’ responses regarding implementing E-commerce

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Franchisees’ responses (i.e. exit, voice, loyalty, neglect) regarding implementing E-commerce:

1. Sometimes loyalty, sometimes voice (SEE A). 2. Mostly loyalty, sometimes voice (SEE B).

3. Mostly loyalty, sometimes voice, sometimes neglect (SEE C). 4. Sometimes loyalty, sometimes voice, sometimes neglect (SEE D). 5. Sometimes loyalty, sometimes voice (SEE E).

6. Sometimes loyalty, sometimes voice (SEE F).

7. Sometimes loyalty, mostly voice, sometimes neglect (SEE G). 8. Sometimes loyalty, sometimes voice (SEE H).

Table 4: Overview of franchisees’ responses regarding implementing E-commerce.

As can be seen in table 4, franchisees’ react mainly in a constructive way (i.e. ‘loyalty’ and ‘voice’) and sometimes in a destructive way (i.e. ‘neglect’) to implementing E-commerce. As a result of a high level of trust and because control is not perceived as bothersome and/or specific control actions by franchisor around E-commerce is missing, franchisees are quite loyal to implement E-commerce. Franchisees are open to implement E-commerce within the franchise system. Moreover, franchisees even think that the franchisor should get more out of their current webstore. In this case, franchisees choose for an active response (i.e. ‘voice’) to discuss new opportunities of E-commerce or discuss about franchisor’s rules (e.g. franchisees’ exclusive territory). In case franchisees agree with their franchisor, a more passive response is chosen by franchisees, namely: ‘loyalty’. In case franchisees do not agree with their franchisor and ‘voice’ and/or ‘loyalty’ does not work out, another passive response is chosen by franchisees, namely ‘neglect’. In this case franchisees neglect franchisor’s feedback or instructions and make their own plan, because the franchisor is usually not that strict (e.g. no penalty or consequence is imposed if a franchisee neglect franchisor’s feedback).

4.2 Data analysis

In this section, I draw on the trust-, control- and EVLN-response literatures to formulate theoretical constructs that correctly reflect the data of my study. Four analytical questions guided my analysis: (Q1) What kind of franchisor’s management actions affect franchisees’ trust in franchisor, and why? (Q2) What kind of franchisor’s management actions affect franchisees’ perceived control of the franchisor, why and is it perceived as beneficial or detrimental to the self and/or the firm? (Q3) How is franchisees’ perceived control of the franchisor related to franchisees’ trust in franchisor and vice versa? (Q4a/b) How do franchisees deal with the implementation of E-commerce in terms of EVLN-responses, why and what is the joint effect of trust and control on franchisees’ responses?

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Figure 3: Conceptual model focused on E-commerce implementation.

(Q1) What kind of franchisor’s management actions affect franchisees’ trust in franchisor, and why?

In table 5, an overview of trust related case-study questions in combination with franchisees’ responses can be found. Franch-isee (SEE) Franchisor’s actions affecting trust and SEE’s trust in

franchisor as a result

How did trust emerge?

Effect from trust on SEE’s business operations SEE’s response (i.e. EVLN) regarding franchisor’s feedback and instructions SEE’s response (i.e. EVLN) regarding implementing E-commerce SEE A Commitment of franchisor: High level of trust.

Through mutual commitment.

Trust and positivity contribute to franchisee’s business operations. Mostly voice, Sometimes loyalty, Sometimes neglect. Sometimes loyalty, Sometimes voice.

SEE B Store visits of

Retail manager: High level of trust.

Over the years and because of positive (financial) results of the system. Trust contributes to franchisee’s business operations. Voice. Mostly loyalty, Sometimes voice.

SEE C The franchise fee

has become more transparent by engaging an independent agency: High level of trust.

Over the years and through mutual commitment because the franchisor treats its franchisees with respect. Trust contributes to franchisee’s business operations. Mostly voice, Sometimes loyalty, Sometimes neglect. Mostly loyalty, Sometimes voice, sometimes neglect.

SEE D Approached by the

franchisor to open a second store: High level of trust.

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SEE F The way of

managing which leads to positive (financial) results of the system: High level of trust.

Because of positive (financial) results of the system. Trust contributes to franchisee’s business operations. Voice. Sometimes loyalty, Sometimes voice. SEE G Development of new plans: Moderate level of trust. It depends on the moment. Franchisor’s plans are good, but the elaboration does not always go well.

Trust contributes partly to franchisee’s business operations, since franchisee has to do a lot by herself. Mostly voice, Sometimes neglect. Sometimes loyalty, mostly voice, sometimes neglect.

SEE H Arrival of a new

management board that developed a clear vision: High level of trust.

The franchisor has a clear vision. Trust contributes to franchisee’s business operations. Mostly voice, Sometimes loyalty, Sometimes neglect Sometimes loyalty, Sometimes voice.

Table 5: Overview of trust related questions in combination with franchisee’s responses.

The data showed clear signals that the relationship between franchisees and their franchisor is positively laden and that franchisees trust their franchisor. Almost all franchisees clearly stated that they highly trust their franchisor (SEE A, B, C, D, E, F & H). In addition, their relationship with their franchisor is important or even very important. Mutual commitment, positive (financial) results of the system and because franchisor and franchisee need each other contribute to a raising level of trust franchisees have in their franchisor. Besides, having trust in franchisor has a positive outcome on franchisees’ business operations. As a result of a high level of trust, franchisees are quite loyal to their franchisor.

Thus, based on interview data, trust in franchisor is present and is important according to the franchisees. I contend that communication, commitment to decisions and commitment to the system (i.e. BeGreen) foster trust. Franchisees explained that trust has developed over the years through mutual involvement. In franchisees' eyes the information exchange between franchisor and franchisees was quite high. Besides, franchisor shared facts and information frequently. Furthermore, it seems that franchisor is willing to share “bad news” as well without fears of having the franchisee react punitively and/or destructively. Also, it seems that the franchisor succeed in committing franchisees to decisions. So making decisions jointly (i.e. franchisor and franchisees) foster franchisees' trust in franchisor. Besides, this encourages the implementation of changes in general. Finally, franchisees are loyal to the BeGreen and do not want to leave the system based on their relation with the franchisor (SEE A, B, C, D, E, F & H), since the level of trust in franchisor is high. It seems that franchisees feel a sense of duty to remain with the system to further the organization’s work. Franchisees will protect their knowledge and expertise of the work unit rather than start a business outside their current system.

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29 system. There are just some difference of opinions among franchisor and franchisees in how to deal with the webstore. Therefore, it seems there is room for improvement regarding franchisees’ trust in how the franchisor deals with the webstore. Moreover, franchisees even think that the franchisor should get more out of their current webstore. Therefore, it seems that increasing ability with regard to skills and knowledge around commerce will foster franchisees’ trust in franchisor regarding implementing E-commerce. Based on interview data, it seems that the visibility of the franchisor’s behaviour foster franchisees’ trust in franchisor regarding E-commerce. A part of the franchisees were very involved in the process of implementing E-commerce and were aware of and familiar with the franchisor’s decisions and actions regarding E-commerce. The franchisor ensures visibility through frequent exchange of information with franchisees (i.e. telephone and e-mail). However, franchisees stated that they prefer more face-to-face-contact, for example with their Retail manager (i.e. more often than once every six weeks). According to literature, face-to-face contact could indeed lead to more high-quality information exchanges, which encourage trust-building (Salam et al., 2003) compared to non-face-to-face contact (e.g. telephone and e-mail). With face-to-face contact, franchisees are able to convey information in greater detail (Salam et al., 2003), thereby preventing any misinterpretations by franchisor and vice versa. Besides, face-to-face-contact allows the franchisor to directly demonstrate competence (Salam et al., 2003) regarding E-commerce. Second, it seems that the franchisor created a culture of trustworthiness. Franchisees have the opportunity to have a dialog regarding changes around E-commerce and the willingness of the franchisor to listen to franchisees' feedback and (dis)agreements. This involves the opportunity for franchisees to voice disagreements by the franchisor. Besides, this gives the franchisor the opportunity to highlight the business considerations that have guided the implementation of E-commerce. Without that degree of (two-way) communication, franchisees may reply, based on mistaken feelings or opinions that undercut perceptions of trustworthiness. A possible explanation of why franchisees trust in franchisor regarding E-commerce is slightly lower than franchisees' trust in franchisor in general could be, because the franchisor did not invest enough in their knowledge and skills regarding E-commerce, as the franchisor did in the rest of the system.

Franchising and E-commerce, does that go together?