Turbulence in Franchise:

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Turbulence in Franchise:

The impact of perceived justice on franchisees’ satisfaction and

response regarding the process of e-commerce implementation.

Master thesis by

Jacky Heemskerk

S2590069

University of Groningen

Faculty of Economics and Business

Master Small Business and Entrepreneurship

6 February 2017

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Abstract

Since the birth of the Internet, e-commerce has been changing the franchising sector, as more and more businesses discover the value of the Internet as a source of plentiful opportunities to support their business. The advent of e-commerce not only has an impact on the franchisors, it greatly influences franchisees too. This study is one of the first studies examining the influence of e-commerce and focuses specifically on how the implementation process is conducted. The present study evolves around the following question: How does the perceived justice, with regard to the implementation process of e-commerce, influence the franchisees’ level of satisfaction regarding e-commerce and, subsequently, the franchisees’ response to e-commerce? This study uses an in-depth case study. Objects of the study are six franchisees from of three different franchise systems, all from the Dutch drugstore industry. The research objective is to provide an understanding of the relationship between both the perceived level of distributive, procedural and interactional justice and subsequently the level of satisfaction and the franchisee’s response. Evidence from the multiple case study, shows that the franchisees overall perceived level of justice, with regard to the implementation of e-commerce, is the most important antecedent for the franchisees’ level of satisfaction regarding e-commerce.

Keywords: Franchising, e-commerce, franchisees’ perspective, distributive justice, procedural justice,

interactional justice, level of satisfaction, level of standardization, franchisee responses.

Acknowledgement

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1. Introduction

Nowadays, the Internet is a central part of the contemporary world. Everywhere in industry - small- to medium-sized enterprises, schools and universities - interactive online information is changing the way we work, learn, live, conduct business and maintain private relationships. The advent of the Internet has caused an explosive growth in the field of e-commerce. More and more businesses are realizing the value of the Internet as a source of plentiful opportunities to support their business. Not surprisingly, e-commerce is rapidly developing to be an important research area as more and more firms venture in electronic commerce (Dixon and Quinn, 2004). Especially the past decade, e-commerce strategies have grown tremendously in most business sectors. At the beginning of the 21st_{century the Internet was}

considered “a good vehicle for advertising and promotion” (Trice, 2001). Nowadays, this is really an understatement. Consumer preferences are changing: Never before was the consumer so unpredictable and has had so many channels to make a purchase, and to gather and share information. The purchasing behavior of the customer calls for a 24-hour economy. Franson and DeSmith (2005) even mention that “as a customer, it is a bit shocking when a company has no website or online inquiry capability (almost as shocking as going to a retail store and finding they only take cash)”.

Figures from the Dutch Central Bureau of Statistics show that customers buy more and more goods and services online. In 2015, 71 percent of the Dutch population bought online (CBS, 2016). In ten years time, this number has more than doubled. This ranks the Netherlands among the top five of online buyers in the European Union. Recent figures from the Netherlands also show a considerable online sales growth in the retail sector. In October 2016, online sales had grown by 19,2 percent compared to October 2015. The online sales from “multi-channelers” (whose sales via the Internet are a secondary activity) had grown by 14,1 percent. The total turnover of drugstores in 2016 amounted to 3.3 million euros (excl. VAT)1_{. Also in the rest of Europe more and more customers went online to shop.}

In 2005, a quarter of Europeans was an e-shopper. Now, in 2017, this is more than half. To this extent, we can conclude that the role of online sales plays an increasingly important role, and that its significance will that will only increase in the coming years.

It may be clear that the global nature of e-commerce and the way in which it allows firms to overcome traditional physical and geographical restrictions presents a significant challenge for businesses; especially for businesses within the franchising sector. The changes in trading and distribution are influencing the franchising business (Abell and Scott, 2000). Blurred boundaries arise within the franchise systems, which are typically dependent on the maintenance of strict territorial rights for their successful operation. As a result, contracts and relationships between franchisor and franchisees

1_{The drugstores are part of the cluster ‘personal care’. This cluster accounts for approximately 6% of total retail}

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are also affected (Watson, et al. 2002). It is therefore not surprising that the development of online selling in the specific context of franchising has raised some issues.

Nowadays, franchisees are more and more in conflict with their parent companies (Dixon and Quinn, 2004; Perrigot and Pernard, 2013; Pernard, Basset and Cliquet, 2016). Bottlenecks include among other things: the distribution of costs and benefits, territory exclusivity, brand protection and return policies. Recently, it turns out that e-commerce is one of the main issues of conflict between franchisors and their franchisees. It is argued that franchisees are not happy with e-commerce activities from the franchisor, as this will damage their profits. This is explicitly recognized and discussed by Abell and Scott (2000), who state that “e-commerce in the franchising relationship is expected to lead to lower levels of satisfaction and to an increased level of conflicts as the franchisor and franchisees have different interest”. Therefore, the use of the Internet in the franchising sector is of interest for both researchers and practitioners. Mainly because both business strategies could be regarded as being conflicting in nature, as franchising relies on the establishment of protected territories for its existence while e-commerce is inherently a distribution method that erodes boundaries and restrictions (Dixon and Quinn, 2004).

Although much has been written about both e-commerce and franchising, there are little to no studies with a specific focus on the influence of e-commerce on the relationship between franchisor and franchisee. While most of the literature relevant to the investigated subject(s) has focused on the franchisors’ perspectives (Dixon and Quinn, 2004; Cedrola and Memmo, 2009; Perrigot and Pernard, 2013; Pernard, Basset and Cliquet, 2016)2_{, one of the novelties of this work is that particular attention}

will be devoted to the franchisees’ perspective. Besides, other novelties of this study (which also presents the main distinctions between this study and the studies presented in Table 1) are that:

(1) This study focuses primarily on the franchisees’ perspective;

(2) It investigate the implementation process of e-commerce and how ‘fair’ this process is by the franchisee;

(3) I further looked at how the franchisees’ perceived justice has an impact on the level of satisfaction regarding e-commerce and how this subsequently influences the response of the franchisee;

(4) Finally, I take into account the perceived standardization level regarding the franchise formula as a moderating variable between perceived justice and level of satisfaction.

The above presented novelties contribute in closing the literature gaps on the different aspects. The question on which this study focuses involves understanding of how e-commerce strategies in franchise systems influence the relationship between franchisor and franchisee, as seen from the franchisees’ perspective. Or, more precisely, how does the perceived justice, during the implementation process of

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e-commerce, influence the franchisees’ level of satisfaction? In this study, the implementation process of e-commerce is seen as a change process. To investigate the franchisees’ level of satisfaction in relation to this change, this study builds on the agency perspective. Within this context, the purpose of this explorative study is to contribute to theory regarding the effect of e-commerce (strategies) in franchise systems on the relationship between franchisor and franchisee.

1.1 Research question

Based on the literature gaps identified in the introduction, the main research question of this study is defined as follows:

‘How does the perceived justice, during the implementation process of e-commerce, influence the franchisees’ level of satisfaction regarding e-commerce and subsequently the franchisees’ response?’

To further explore the main research question, the following research (sub-)questions were formulated:

RQ 1.1: “How does the perceived distributive justice, during the implementation process of e-commerce, influence the franchisees’ level of satisfaction of e-commerce?”

RQ 1.2: “How does the perceived procedural justice, during the implementation process of e-commerce, influence the franchisees’ level of satisfaction of e-commerce?”

RQ 1.3: “How does the perceived interactional justice, during the implementation process of e-commerce, influence the franchisees’ level of satisfaction of e-commerce?”

RQ 1.4: “How does the franchisee respond in case of (dis)satisfaction regarding e-commerce?”

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2. Theoretical background

To explore the main research questions, the theoretical background regarding the most relevant topics of this study is discussed. The purpose of this chapter is to provide a detailed understanding of the relevant concepts included in this study. In order to do so, it is important to first provide a clear definition of franchising and e-commerce. Additionally, e-commerce in a franchise context is discussed followed by literature regarding agency problems. The sections 2.5.1 up to and including 2.5.4 specify the variables. Finally, section 2.5.5 graphically presents the conceptual model which is develop in this chapter. Based on the literature review, several propositions are developed to formulate some expectations of this study.

2.1 Franchising

Franchising has become a popular business strategy in many industries around the world (Inma, 2005; Sen, 1998; Sorenson and Sorensen, 2001; Kaufmann and Eroglu, 1998; Dant and Kaufmann, 2003; Quinn and Doherty, 2000; Wu, 2015). Although there exists no internationally accepted definition of a franchise, it is important to provide a clear definition of franchising and to specify the form of franchising related to this study. The broad overall definition of franchising that can be found online on most websites is stated below. In this definition, formulated by the IFA (International Franchise Association), the roles of the franchisor and the franchisee are also disclosed.

“Franchising is a method for expanding a business and distributing goods and services through a licensing relationship. In franchising, franchisors (a person or company that grants the license to a third party for the conducting of a business under their marks) not only specify the products and services that will be offered by the franchisees (a person or company who is granted the license to do business under the trademark and trade name by the franchisor), but also provide them with an operating system, brand and support” (www.franchise.org/what-is-a-franchise).

The above franchise definition bears great similarity to the viewpoints of different scholars. For example, Cochet et al. (2008) define franchising as “a form of collaboration in which an upstream firm, the franchisor, sells the right to market its products and/or services using a proven business concept and its brand name to legally independent entrepreneurs, the franchisees”. Von Seidel (1996) gives the following definition for a franchise agreement: “under a franchise agreement a franchisor usually provides a substantially complete business package to a franchisee. In return the franchisee pays a sum usually related to the turnover of the franchise operation”.

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strategy and plan, operating manuals and standards, quality control, and continuing two-way communication (Lafontaine, 1992).

2.2 E-commerce

In literature, there is no common definition of e-commerce. Moreover, which will appear from the following section, the definition of e-commerce has changed drastically over time. Where some researchers consider e-commerce to be a commercial process (buying and selling) only, others see it more as a non-commercial process (sharing information). Moreover, Kalakota and Whinston (1996) provide a more ‘commercial’ definition of e-commerce, namely “... the buying and selling of information, products and services via computer networks today and in the future via any one of the myriad of networks”. Klein and Langenohl (1994) revised this definition by including electronic shopping systems. Zwass (1996, 2003) was one of the earlier scholars to endorse the importance of the new e-commerce. According to Zwass, e-commerce represents “the sharing of business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks” (1996). Another description of e-commerce is provided by Schneider & Perry (2000), who argue that electronic commerce allows businesses and consumers to purchase goods and services, and exchange information on business transactions online.

As can be seen, e-commerce has been defined in several ways depending on the context and research objective of the author(s).This study focuses on the business-to-customer part of e-commerce (i.e. transactional websites). Hereby, I specifically focus on the transactional part (i.e. customers can buy products on the transactional website. I do not focus on the “sharing of business information” part. This category of e-commerce is often used as a method to replace or improve the traditional market channels by opening web shops (Molla and Licker, 2001). Since their definition is adapted to a franchise context, I use the following definition by Perrigot and Penard (2013) in this thesis: “the franchise system making use of a transactional website to make online trading possible”. Therefore, when in this study the term ‘e-commerce’ or ‘e-commerce strategy’ is used, it refers to the transactional website of the franchisor. In the following section I further specify e-commerce in a franchising related context.

2.3 E-commerce in a franchise context

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There are several important reasons, both positively and negatively regarded, why understanding e-commerce in franchising is so important (Perrigot and Penard, 2013). To begin with, franchising deserves specific attention because of its continuous growth in both developed and emerging countries. Second, e-commerce strongly influences the value of the franchisors’ business format by changing brand awareness and brand perception, since brand name is a key element of franchising. Finally, one of the major pitfalls of commerce in a franchise context is that the franchisors’ e-commerce strategy may be a source of conflict within franchise networks. Franchisees who often benefit from exclusive territories might consider their franchisor’s online sales as unfair competition, similar to a territorial encroachment (i.e., when franchisors add new stores close to already existing stores). Nair et al. (2009) also recognize this latter reason, as they state that conflict is created when business format franchisors penetrate existing markets with new outlets that increase system-wide sales, but negatively affect the sales and profits of existing franchisees. Although Nair et al. (2009) do not explicitly take the e-commerce-part in account, it is obvious that e-commerce strategies used by franchisors does influence and affect the sales and profits of existing franchisees. It becomes clear that e-commerce strategies in franchise systems can cause many conflicts. Because franchisors receive royalties on franchisees’ gross sales, they seek to maximize system-wide sales, whereas franchisees seek to maximize the net profits of their individual outlets. These two goals are not always compatible and the main challenge is to keep both parties satisfied. Other authors (e.g. Abell and Scott, 2000; Watson et. al, 2002) argue that the main reason for conflict with regard to e-commerce is the franchisees’ fear that it would damage their profitability. They fear that the customers who normally buy goods in their franchise store, would now buy the product directly online by using the website of the franchisor. Kaufmann and Eroglu (1999) also state that exclusivity of territory is one of the main issues in a franchise relationship. According to Abell and Scott (2000), the main challenge of e-commerce strategies in franchising is to reconsider traditional concepts of geographical and territory exclusivity. As can be seen, e-commerce strategies in franchising can cause many conflicts. Since e-commerce has grown tremendously over the past decades, this problem will likely increase.

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franchisees. This makes my study distinctive and ‘new’ compared to the already existing studies concerning e-commerce in a franchising contest.

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2.4 Agency problems

From an agency perspective, the relationship or contract between a ‘principal’ and an ‘agent’ is the central unit of analysis. In this relationship, the principal is the party who delegates work to the other (the agent). The agency perspective focuses on establishing the most efficient contract for governing the relationship between principal and agent (i.e. the ‘agency relationship’). The aim is to ensure that the agent fulfills the objective of the principal while at the same time limiting the agent’s self-serving behavior (Croonen, 2005). (For clarity, within this thesis the franchisor can be seen as the ‘principal’ and the franchisee can be seen as the ‘agent’).

The agency problem, identified in 1976 by Jensen and Meckling, relies on the separation between ownership and control in companies characterized by dispersed ownership, or between majority shareholders and minority shareholders in companies with a blockholder (the ‘owner’ of a large amount of company’s shares and/or bonds) who possesses the majority vote and decision power (Donadelli et. al., 2014). As Jensen and Meckling (1976) originally theorized, agency problems arise from the information asymmetry that results from the division of labor between the principal and the agent and from potential goal conflict and risk preferences of the two parties. The primary interest of the owner/principals is to maximize the return from their investments, while the main interest for the manager/agent is to: (1) maximize their profit; (2) maintain their position; and (3) gain personal benefit (Johnson et al., 2009; Robinson and Sartore, 2011). It may be clear that both franchisor and franchisee aim to maximize their profit, although both with different perspectives. As a result, conflicts in the relationship may arise.

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2.5 Introduction to the conceptual model

The remainder of this chapter discusses the different variables of the conceptual model that is used in this study. The variables are discusses and presented here, because it provides a better understanding of the contents of the variables. In the following sections the variables and their indicators are discussed. Finally, section 2.5.5 depicts the graphical presentations of the conceptual model.

2.5.1 Franchisees’ response

The franchisees’ response, which is the dependent variable within our conceptual model, is described on the basis of the EVLN-typology. Based on the EVLN-typology indicators have been developed for measuring the franchisees’ response in the case studies.

EVLN-typology

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(Croonen & Brand, 2009). The following descriptions/indicators are used to specify the different EVLN- responses within the current study:

- Exit: the franchisee ends the relationship with the franchisor;

- Voice: the franchisee actively express him/herself and discusses the problem(s) with the

intention of improving conditions in the franchise relationship;

- Considerate voice: the franchisee attempts to solve the problem with regard to his/her own

concern as well as those of the franchisor;

- Aggressive voice; the franchisee wants to ‘win’ without any consideration of the concern of

the franchisor;

- Loyalty: the franchisee remains ‘silent’ and is confident that the problem with the franchisor

will improve by ‘giving things some time’;

- Ambiguity: the franchisee is not sure how to react and waits to see what happens before

adopting further responses;

- Neglect: the franchisee allows the franchise relationship to deteriorate by ‘letting things fall

apart’.

A graphical representation of these possible responses is presented in the figure below (Figure 1).

Figure 1: Typology of responses of partners in relationships

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the implementation process of e-commerce took place. It is expected that the less satisfied the franchisee is with the change process (i.e. the implementation of e-commerce) the more destructive the franchisees’ response. Vice versa; the more satisfied the franchisee is with the change process (i.e. the implementation of e-commerce) the more constructive the franchisees’ response. The focus within this study is therefore on the horizontal dimension; the constructive and destructive response, because this reflects the franchisee’s main intention regarding the ‘change process’ (i.e. the implementation of e-commerce), which ultimately also effects the franchise relationship. The constructive responses aimed at reviving or maintaining the relationship, and destructive responses aimed at ending or destroying the relationship.

2.5.2 Dimensions of perceived justice

The franchisees’ perceived justice is the independent variable within the conceptual model. Based on different literature, indicators have been developed for measuring the franchisees’ level of perceived justice in the case studies.

In general, justice is defined as the quality of being fair and reasonable. In research in the organizational sciences, justice is generally considered to be a social construct. That is, an act is defined as ‘just’ if most individuals perceive it to be so on the basis of empirical research (Cropanzano and Greenberg, 1997). According to Furby (1986), justice is generally considered to be an evaluative judgment about the appropriateness of a person’s treatment by others. Individuals use justice rules to evaluate fair treatments, and the extent to which these rules are ‘satisfied’ or ‘violated’ determines perceptions of justice or injustice, respectively (Rawls, 1999). Notions of justice and fairness help individuals determine what is expected of them and what they should expect during and from the decision-making process. Therefore, a justice framework seems well suited for exploring how notions of fairness may facilitate or impede an individuals’ willingness to agree on key issues such as vision, strategy, or in other words; a change process (Hearld et al., 2013).

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Other social justice theorists (e.g. Moorman, 1991) distinguish between three dimensions of justice; distributive, procedural and interactional. Another study (Colquitt, 2001) looked at justice as a four-dimensional construct of distributive, procedural, informational, and interpersonal justice.

For this thesis, I build on the work of Cohen-Charash and Spector (2001). Within their study they use the ‘traditional’ three-dimensional approach. The use of this traditional three-dimensional approach is most common and, therefore, other possible dimensions, such as informational justice, will not be used in this study. In the following sections the three dimensions are described using the study of Cohen-Charash et al. (2001). Table 2 (presented at the end of this section) provides an overview of the definitions of these three dimensions of justice.

▪ Distributive justice

As distributive justice deals with the perceived fairness of outcomes, it has the potential to have strong implications in the organizational context, of which distribution of outcomes is an integral part (Cohen-Charash and Spector, 2001). Realizing the potential implications of distributive justice, on the organizational context, researchers examined the perceived fairness of organizational outcomes (e.g., pay selection, and promotion decisions) and the relations of these justice perceptions to numerous criterion variables, such as quality and quantity of work (Walster, Walster and Berscheid 1978). Other researchers defined distributive justice as “the distribution of benefits, costs, and other outcomes resulting from organizational decisions” (Colquitt 2001; Deutsch 1985). The primary justice rules used by individuals to evaluate distributive justice are equity and equality (Colquitt 2001; Deutsch 1985). Due to its focus on outcomes, distributive justice is predicted to be mainly related to cognitive, affective and behavioral reactions to particular outcomes. Thus, when a particular outcome is perceived to be unfair, it should affect the person’s emotions (e.g. experience anger, happiness, pride, or guilt; Weiss, Suckow and Cropanzano 1999), cognitions (e.g. cognitively distort inputs and outcomes of himself/herself of the other; Adams, 1965; Austin and Walster 1974; Walster et al. 1978), and ultimately their behavior (e.g., performance or withdrawal).

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‘give and take’ that is essential to finding common ground on important issues the franchise relationship may face as it moves forward (Campbell, 2008). Thus, on the basis of this reasoning, I propose the following for the distributive justice dimension of perceived justice:

Proposition 1: The higher the franchisee’s perceived distributive justice with regard to the implementation of e-commerce, the higher the franchisees’ level of satisfaction of e-commerce.

▪ Procedural justice

As the research in social psychology shifted from purely emphasizing the results of reward allocation (distributive justice) to emphasizing the process by which allocations were made (procedural justice; Leventhal, 1980; Thibaut and Walker, 1975), the study of justice in organizations made a similar shift. No longer was the perceived fairness of outcomes considered to be the only determinant of perceived organizational justice, but rather, the perceived fairness of the process by which the outcomes were achieved also gained importance and in some cases even became the most important determinant of perceived organizational justice (Lind and Tyler, 1988). Accordingly, “an individual’s perceived fairness about the formal procedures governing the decisions” (Colquitt 2001; Deutsch 1985).

Procedural justice is considered to exist when procedures embody certain types of normatively accepted principles. These principles can be translated to the context of strategic change in franchise systems. For this study, the change process refers to the implementation process of e-commerce by the franchisor. For example, according to Leventhal’s (1980) conceptualization, there are six rules that, when followed, yield procedures that are considered to be fairer than otherwise would have been the case:

(1) The consistency rule, stating that allocation procedures should be consistent across franchisees and over time;

(2) The bias-suppression rule, stating that personal self-interests of the franchisor should be prevented from operating during the change process;

(3) The accuracy rule,referring to the correctness of the information used in the change process; (4) The correctability rule, dealing with the existence of opportunities to modify and reverse unfair decisions;

(5) The representativeness rule, stating that the needs, values, and outlooks of all franchisees affected by the change process should be represented in decision making regarding the process; (6) The ethicality rule, according to which the change process should be compatible with fundamental moral and ethical values of the franchisee.

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e-commerce (e.g. the franchisees’ perceived procedural justice). Then, if the franchisee perceives the procedures (during the implementation process of e-commerce) as high, it is more likely he or she will accept the implementation of e-commerce. Thus, I propose the following:

Proposition 2: The higher the franchisee’s perceived procedural justice with regard to the implementation of e-commerce, the higher the franchisees’ level of satisfaction of e-commerce.

▪ Interactional justice

Interactional justice pertains to the human side of organizational practices. That is, to the way the management (or those controlling rewards and resources) behaves toward the recipient of justice (Cohen-Charash and Spector, 2001). As such, interactional justice relates to the aspects of the communication process between the source and the recipient of justice, such as politeness, honesty, and respect (Bies and Moag, 1986; Tyler and Bies, 1990). Within this study, the interactional justice part refers to the communication process (during the implementation process of e-commerce) between the franchisor and the franchisee. Previous studies have identified a number of other elements associated with interactional justice, such as; truthfulness, the provision of an explanation (Bies and Moag, 1986), politeness, friendliness, sensitivity, interest, honesty (Clemmer, 1993), empathy and assurance (Parasuraman et al., 1985), directness and concern (Ulrich, 1984), and effort (Mohr, 1991).

Because interactional justice is determined by the (inter)personal behavior of the management’s representatives, interactional justice is considered to be related to cognitive, affective, and behavioral reactions toward these representatives, that is, the direct supervisor or source of justice (Bies and Moag, 1986; Masterson, Lewis-Mcclear, Goldman and Taylor, 2000). Thus, when a franchisee perceives interactional injustice, he/she is predicted to be dissatisfied with his/her franchisor and will, accordingly, negatively react toward his/her franchisor.In all probability, this would mean that the franchisees’ level of satisfaction to e-commerce would be lower. Naturally, this would mean that when the franchisees’ perceived interactional justice is high, this would have a positive effect on the franchisees’ level of satisfaction to e-commerce. Therefore, I propose the following:

Proposition 3: The higher the franchisee’s perceived interactional justice with regard to the implementation of e-commerce, the higher the franchisees’ level of satisfaction of e-commerce.

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Justice form Definition

Distributive Justice The franchisees’ perceived fairness of outcomes regarding e-commerce

Procedural Justice The franchisees’ perceived fairness of the process by which outcomes were arrived

regarding e-commerce

Interactional Justice The interpersonal treatment and communication by franchisor to franchisee during

the implementation process of e-commerce

Table 2: Overview definitions of the three dimensions of justice based on Cohen-Charash et al. (2001).

2.5.3 Franchisees’ level of satisfaction

The franchisees’ level of satisfaction is the mediating variable between the franchisees’ perceived level of justice and the franchisees’ response regarding e-commerce.

Many studies have been executed in the domain of franchisee satisfaction (Altinay et. al., 2014; Hing, 1995; Mellewigt, et al., 2012; Morrison, 1996). Franchisee satisfaction is important because it increases a franchisees cooperative intent with the franchisor, leading to lower levels of intra-system conflict (Koza and Dant, 2007). Furthermore, Abdullah et al., (2008) explain that increased franchisee satisfaction will lead to a reduction of conflict between the two parties, and it is likely to increase channel efficiency. Maintaining a harmonious franchisor-franchisee relationship is a major determinant of franchising systems growth and success (Floyd and Fenwick, 1999). Eventually, enhanced satisfaction among franchisees will lead to greater contributions and commitment (Altinay et al., 2014; Abdullah et al., 2008).

Based on the above mentioned studies it can be concluded that maintaining a high level of franchisee satisfaction is very important. Thus, when franchisors aim to implement change, such as e-commerce (i.e. a transactional website), one major factor they have to take into account is franchisees’ satisfaction. If the franchisee is dissatisfied and therefore reluctant to accept the change, it can cause major conflicts both before and after implementation. An example of this is the quarrel between the parent company Albert Heijn and some franchisees. The conflict between the supermarket chain and its franchisees has now risen so high; a lawsuit between the parties is the result (https://www.nrc.nl/nieuws/2016/09/12/opstand-franchisers-bij-albert-heijn-4250051-a1521006). Therefore it is important to achieve a better understanding of the way in which the franchisor’s implementation process of e-commerce influences the level of the franchisees’ satisfaction.

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(Altinay et al., 2014; Morrison 1996; Weaven et al., 2014). Hing (1995) relates franchisee satisfaction to expectations by stating that satisfaction depends on whether the franchise system can deliver what franchisees expect. In this study, the franchisees’ level of satisfaction is related to the different dimensions of perceived justice. How this will be measured is explained in the methodological section.

2.5.4 Franchisees' perceived standardization level

The franchisees’ perceived standardization level (within the franchise formula) is the moderating variable between the (three different dimensions of) franchisees’ perceived justice and the franchisees’ level of satisfaction with e-commerce.

The franchise business format can differ in terms of high or low standardization systems (Kaufmann and Eroglu, 1998). From a transaction cost perspective, the lower the standardization franchise systems the relatively closer they are to the market form. Contrastively, standardized systems are relatively close to the hierarchical form (see Figure 2).

Figure 2: Franchising from a transaction cost perspective (adopted from Croonen, 2005).

The level of standardization is one of the franchise system characteristics that influences strategic compatibility between the franchise partners. Franchisees in a (high) standardized system have little room for local variation or exploration, because the franchisor wants to maintain uniformity and exploit its own business format. Franchisees in a low standardized system have much more room for local variation or exploration, since the franchisor attaches less importance to uniformity.

According to (Kaufmann and Eroglu, 1998), it is frequently the franchisees who, through their local adaptation attempts, develop new offerings, modify existing ones, and find solutions to system wide problems. Excluding franchisees from the process of innovation (i.e. change) can introduce a serious inertia into the system, which may well destroy its ability to function in a changing environment. Kaufmann and Eroglu (1998) further state: “To succeed in its role as creator, builder, and guardian of its business format, the franchise entrepreneur must resolve the constant, yet evolving, tension between the two strategic imperatives of standardization and adaptation”.

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vulnerable the franchisee, and thus the more critical the franchisee will be regarding the changes (the implementation (process) of e-commerce). Therefore, I propose the following:

Proposition 4: The higher the franchisees’ perceived standardization level, the more he/she values a high level of perceived justice. This subsequently influences the level of satisfaction of e-commerce, because the franchisee will be more critical towards the overall implementation process.

2.5.5 Conceptual model

The previous sections described the different variables of the conceptual model. To investigate all the variables and their underlying relationships, a conceptual model has been developed. The figure below (Figure 3), depicts the graphical presentations of the conceptual model.

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3. Methodology

As stated earlier, the aim of this explorative study is to investigate the influence of e-commerce (and the implementation of e-commerce) in franchise systems. According to Yin (2014), exploratory research is useful when a specific field of research is underdeveloped, which is the case in this thesis. In contrast to most franchising studies, I do not look at the franchisors’ perspective. Instead, I focus on the franchisees’ perspective. More specifically, I look at how the perceived justice, during the implementation process of e-commerce, has an influence on the franchisees’ level of satisfaction. Although we do not yet know how the abovementioned forms of justice (see section 2.5.2) will influence the response of the franchisee precisely, I have formulated my expectations in the form of four propositions.

3.1 Case study approach

This study will follow the case study method of Yin (2014). Case studies are appropriate for answering ‘how’ and ‘why’ questions. Since ‘how’ and ‘why’ questions are usually quite broad, I developed propositions to provide enough guidance on the data that needs to be collected. The selected research method will be used in order to ‘test’ these propositions. By means of ‘pattern matching’ (Yin, 2014), the propositions then can be ‘tested’ in order to draw conclusions. ‘Pattern matching’ is the comparison of two patterns in order to determine whether they match (i.e., that they are the same) or do not match (i.e., that they differ). By exploring this phenomenon, I will make a contribution to the literature on e-commerce in a franchising related context and therefore development is needed to explore this phenomenon. Furthermore, I will use qualitative data in an attempt to refine theory.

3.2 Sample

As pointed out in the introduction, this study focuses on retail companies because of the B2C e-commerce category. This thesis applies a case-study approach with six cases within the Dutch drugstore industry. The companies chosen for the case studies are three different drugstores (Etos, DA and D.I.O.) in the north of the Netherlands. These three drugstores are selected because these are the three biggest franchise formulas within the Dutch drugstore cluster. From each drugstore, two different franchisees were interviewed; one franchisee located in the city, and one located outside of the city. The reason for choosing these franchisees is that Yin (1994, p. 45-50) advises that “multiple cases” should be regarded as “multiple experiments” and not “multiple respondents in a survey”, and so replication logic and not sampling logic should be used for multiple case studies. That is, representativeness is not the criterion for case selection, rather the choice of each case should be made such that it either:

1. Predicts similar results for predictable reasons (that is, ‘literal replication); or

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(For this study I selected for each case one franchisee located in the city and one franchisee outside the city, because I expected interesting results regarding similarities and differences between both). Other researchers support this method of case selection and highlight the inapp ropriateness of random sampling, for example, Eisenhardt (1989, p. 537) states that the “random selection of cases is neither necessary, nor even preferable”.

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24 Chain Nr. of stores Type of cooperation / Formula Extra information Etos Franchise since 1988 539 including 242 franchised ‘Hard’ franchise / standardized

- Second largest drugstore chain in the Netherlands (largest among the franchise stores);

- Is part of Ahold (a big Dutch retail group). E-commerce activities:3

- Started with e-commerce in approx. 2014; - Etos is the only chain (of these three drugstores) without its own transactional website. The assortment of Etos can be purchased online through the website of Albert Heijn (which is also part of Ahold);

- Purchases are delivered at home or at an Albert Heijn store (no possibility to pick up at an Etos store); - None of the Etos franchisees are ‘allowed’ to participate/join the transactional website.

Da Franchise since 1942 216 including 210 franchised ‘Hard’ franchise / standardized

- In 2014 the central organization of DA had a major conflict (lawsuits) with their franchisees (because of new plans);

- DA was declared bankrupt in December 2015; - This has led to a restart (April 2016) under a new organization (Nederlandse Drogisterij Service B.V.); - In December 2016, DA took over D.I.O.

E-commerce activities:

- Started with e-commerce in approx. 2014; - Only a few DA franchisees participate/join the transactional website (the ones who agreed with the new plans);

- The website is ‘centrally controlled’ (orders are delivered at home, no option to pick-up at a DA-store).

D.I.O. Franchise since 1993 200 including 162 franchised ‘Soft’ franchise / low standardization

- Known as the ‘local hero’ among the drugstores (i.e. has a close relationship with their customers/the ‘locals’);

- ‘Youngest’ among the three drugstores. E-commerce activities:

- Started with e-commerce in approx. 2012; - The transactional website is ‘customer driven’ i.e. customers decide where they want their online purchases to be delivered (at home or pick up at a DIO store of choice);

- All franchisees are ‘allowed’ to participate/join the transactional website.

Table 3: Overview of the three chains (in which the drugstores operate) used in this study4

3_{In this context e-commerce activities refers to the transactional website of the franchisor.}

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3.3 Data collection and analysis plan

According to Yin (2014), conducting interviews to gather data is one of the most important sources of case study evidence. Therefore, the data for the analysis was obtained by conducting semi-structured interviews with six franchisees within the Dutch drugstore industry. The interviews included a set of predetermined closed and open questions. However, during the interview the interviewer has the freedom to go deeper into the subject by asking questions based on the interviewee’s answers. In order to get the needed information per variable, for most of the questions the interviewee must answer questions on a five-point scale and provide a qualitative explanation for each score. The items are rated using a five-point Likert scale, which is a commonly used measurement scale in studies towards satisfaction. Scores vary between one, which means ‘very low’, and five, which means ‘very high’. After the data is collected, it will be analyzed according to pattern matching and explanation building. Yin (2009) discusses pattern matching as the most desirable analytic strategy in case study research. Pattern matching is a comparative analysis that looks for coinciding patterns from each case to identify evidence in order to compare to the propositions. Explanation building is used to develop a general explanation that can be applied to each individual case.

Table 4 provides an overview of the main interview questions and how the key variables are measured:

Variables Franchisee interview questions Measurement Questions

(A) Background variables

Several introductory open questions to sketch the context of the franchisee in terms of length of franchise relationship in years, number of franchise units, reasons for choosing franchise formula X, previous (franchise) experience. Two questions regarding perceived competition (interbrand/intrabrand).

n/a A.1 - A.6

(B) Franchisees’ perceived justice during the e-commerce implementation process (= independent

variable)

How were you informed about the e-commerce implementation? How did you feel about it? What do you think about the way the franchisor introduced the e-commerce implementation? - Distributive justice: How ‘fair’ do you perceive the outcomes of the e-commerce implementation process? Why?

- Procedural justice: How ‘fair’ do you perceive the overall process of the e-commerce

implementation process? Why?

[Question B.7 - B.12 are based on the six rules by Leventhal (1980)] Five-point scale5 and qualitative explanations for each score B.1 - B.17

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- Interactional justice: How ‘fair’ have you been treated during the e-commerce implementation process by the franchisor? Why?

And how ‘fair’ do you perceive the

communication process by franchisor during the e-commerce implementation process? Why?

(C) Franchisees’ response regarding e-commerce

implementation (= dependent variable)

Open question about the franchisee’s actual behavior when the e-commerce implementation was introduced: ‘As you first learned about the implementation of e-commerce, how would you describe your reaction?’

Closed target questions to position the franchisee’s response in the

constructive/destructive and active/passive dimension:6

- Active/passive: Did you contact the franchisor?

- Constructive/destructive: If you contacted the franchisor, what did you say or do and why? If you did not contact the franchisor, why not? [Questions repeated for during/after the implementation process]

How was the reaction of the franchisor? Was there a difference before/after implementation?

Constructive or destructive (Based on EVLN-typology) C.1 - C.6 (D) Franchisees’ level of satisfaction regarding e-commerce implementation and outcomes (= mediating variable)

How would you rate your overall satisfactions with your franchisor and its franchise system? Why?

How has your satisfaction with the franchisor before the implementation process developed over time? Why?

Five-point scale and qualitative explanations for each score D.1 - D.5 (E) Standardization level of franchise formula (= moderating variable)

How do you perceive the standardization level in your franchise system, on the basis of:

corporate identity, promotional activities, stock, purchase location, shop interior, training, media expressions and competition.

Five-point scale and qualitative explanations for each score E.1 - E.3 (F) Final (open) questions

Open question regarding desired changes concerning e-commerce and the implementation process. Open question regarding any comments of the study.

n/a F.1 - F.2

Table 4: Main interview questions and measurement of key variables

The information in the table above, Table 4, offered support with the establishment of the interview questions. The complete questionnaire is presented in Appendix 1.

6_{As mentioned in the theoretical background, this study focuses on the constructive/destructive dimension. However, data also}

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3.4 Discussion of controllability, validity and reliability

In this study, I follow the quality criteria of Van Aken et al., (2012). The first criterion described by the authors is ‘controllability’, which requires that the results are controllable (Van Aken, 2012). The authors describe that a research is controllable when it is revealed how the study is executed. Controllability of this study is addressed by: (1) describing the research process in detail in this chapter, (2) transcribing the interviews in a way that is closest to the actual recording and (3) providing the interview guide in the appendices.

The second criterion is the reliability of the study; this means that the study needs to be independent of the particular characteristics (Yin, 2003). In other words: the measurements must be free from the influence of random factors (Verhoeven, 2010). With regard to the current study, the establishment of a research framework based on the current literature, an interview guide, all serve to standardize the research process and subsequently increase the reliability of this study.

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4. Results and analysis

In this section, the results and an analysis of the key findings are presented. First, I describe the cases in a more comprehensive way. Based on the results of the interviews, I provide some important overall information about the cases that were interviewed. After that, the results of the six different cases are described and discussed by means of a within-case analysis. In addition, a cross-case analysis will obtain insight in the main differences and similarities between the cases.

4.1 Short overall description cases

As described in the method section, six franchisees in the Dutch drugstore industry were interviewed. All the franchisees are located in the north of the Netherlands, in the province of Groningen. Per franchise chain, one franchisee is located in (the city of) Groningen, and the other franchisee is located in villages around Groningen. From the six cases, two females and four males were interviewed. The duration of the franchise relationship with their franchise formula differs from 6 to 21 years. Only two of the cases had experience with another franchise formula. One Da-franchisee (DA I) had experience with Etos and one DIO-franchisee (DIO II) had experience with the DA-formula. The reasons for choosing their current franchise formula differ mainly between the Etos-franchisees and the DIO and DA-franchisees. The two Etos franchisees both chose the Etos-formula because it is a very “powerful” formula with a “strong” brand name. Both DA-franchisees and DIO-franchisees chose their formula because of the ‘freedom’ within the formula (i.e. a low level of standardization). When asked to rate the relationship with their franchisor (how it is now), the two interviewed DA-franchisees were least satisfied. Both DIO franchisees as well as the Etos franchisees rated the relationship with their franchisor as highest. Off all six cases, DA II was least satisfied and DIO II was most satisfied.

With regard to e-commerce, only one of the six franchisees (DIO I) joins the e-commerce activities (the transactional website) of their franchisor7_{. DIO II is allowed to join, but doesn’t want to}

(at least not yet). Both DA-franchisees were allowed to join, but only if they participate with all the new plans8_{. Because they did not participate with the new plans at the time, they are no longer allowed to}

participate. Both Etos-franchisees were not allowed to participate in their franchisors’ transactional website. The table below (Table 5) summarizes these findings.

7_{Participate/join the transactional website refers to whether the franchisee is allowed to participate/join the}

transactional website of the franchisor (i.e. receive compensation for online sales on the franchisor’s transactional website).

8_{The implementation of e-commerce was introduced during a national meeting by the CEO of DA headquarters.}

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Case Chain Location Gender Duration

relationship Participation transactional website9 Score relationship10

1 Etos I City M 10 years No 4

2 Etos II Village F 20 years No 4

3 DA I City F 21 years No 2/3

4 DA II Village M 18 years No 2

5 DIO I City M 6 years Yes 4

6 DIO II Village M 10 years No 4/5

Table 5: Overview cases (based on the background questions from interview)

4.2 Overview interview results

Table 6 provides an overview of the (numerical) results. The qualitative explanation for each score is not included in order to keep the table compact and well organized. Moreover, this way the overall patterns of the results are clearly displayed. For all results, including the qualitative explanations, see the transcripts of the six interviews (appendix 2-7).

First, some remarks regarding the table:

▪ The left side of the table follows the chronological order of the interview;

▪ The chains ranked I are the franchisees located in the city of Groningen, the chains ranked II are the franchisees located in villages outside the city of Groningen;

▪ Some questions (on the left side of the table) have been edited in length to fit the table;

▪ All items (except from questions A1-A4, C2-C6, E3) are measured on a five-point scale ranked from 1= very low to very high = 5;

▪ The scheme below shows the meaning of the colors and the related scores.

Score: Color:

1 - 1/2 - 2 2/3 - 3 - 3/4

4 - 4/5 - 4

9_{The column ‘Participation transactional website’ refers to whether the franchisee is allowed to participate/join}

the transactional website of the franchisor (i.e. receive compensation for online sales on the franchisor’s transactional website).

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Etos DA DIO

(A) Background questions Etos I Etos II DA I DA II DIO I DIO II A.1 - Duration of the franchise

relationship? 10 year 20 year 21 year 18 year 6 year 10 year A.2 - How many businesses have you

(had) at the X-formula? 2 1 1 1 1 1

A.4 - Been a member of another

franchise formula? No No Etos No No DA

A.6 - How do you rate the relationship

with the franchisor at this moment? 4 4 2/3 2 4 4/5

(B) Perceived justice B.3 - What do you think of the way the franchisor informed you about the implementation process of e-commerce?

2 2 1 1 4/5 5

Distributive justice

B.4 - What do you think of the distribution of benefits/costs and other outcomes that are the result of the implementation of e-commerce?

2 2 1 1 4 3

B.5 - To what extent do you find these

outcomes fair? 2 2 1 1 4/5 3

B.6 - To what extent does e-commerce

match your own activities / goals? 4/5 3 3 1 4 4/5

Procedural justice

B.7 - To what extent you feel that the implementation process was consistent among the franchisees?

2/3 3 2 1 3/4 5

B.8 - To what extent you feel the implementation of e-commerce is based on the franchisees’ interests?

2 1/2 1 2 4/5 5

B.9 - To what extent you feel the implementation process is based on proper and clear information?

1/2 2 4/5 1 4 5

B.10 - To what extent was it possible for

you to modify or reverse the decisions? 2 1 1 1 1/2 1

B.11 - How important was the role of the

Franchise Board for you? 5 4 3 2 1 2

B.12 - To what extent does the way e-commerce is implemented matches your

moral and ethical values? 2 1/2 1 1 4/5 5

B.13 - How ‘fair’ did you observe the overall e-commerce implementation process?

1/2 1/2 1 1 4 4

Interactional justice

B.14 - To what extent does the franchisor has given a statement about the

implementation process?

1 3 4 3 4 4

B.15 - To what extent the franchisor has

shown empathy? 1 2 1 1 3 5

B.16 - How ‘fair’ did you perceive the interpersonal treatment by the

franchisor?

1/2 2 1 1 4 5

B.17 - How ‘fair’ did you perceive the

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Etos DA DIO

Etos I Etos II DA I DA II DIO I DIO II

(C) Response regarding e-commerce C.2 - Did you contact the franchisor at

the time of the introduction? No No Yes Yes Yes No

C.4 - Franchisor contacted during or after

the implementation process? No No Yes No Yes Yes

C.6 - Was there a difference in how the franchisor responded prior to the implementation process and afterwards?

n/a n/a No Yes No No

(D) Level of satisfaction D.1 - How satisfied are you with the

implementation process of e-commerce? 2 2 1 0/1 4 4

D.2 - To what extent do you accept the

implementation of e-commerce? 2/3 2/3 1 0/1 4 4

D.3 - How would you rate your overall satisfaction with your franchisor and the franchise system?

4 4 3 1/2 4 5

D.4 - How did your satisfaction with the franchisor develop before / after the implementation process?

4/5  4 4/5  4 4/5  1/2

3/4  1 3  4 4/5  4/5 D.5 - To what extent do you agree with

the following statement: "The franchisors’ transactional website is beneficial for my company?"

1/2 2 1 1 4 4

(E) Standardization level E.1 - How do you rate the ‘degree of

freedom’ in the franchise formula? 2 3 4 3/4 4/5 5

E.2 - How ‘free’ are you regarding the following aspects? Corporate identity 2 1 1/2 2 2 4 Stock 3 3 5 4 5 5 Shop interior 2 1 4 5 3 5 Training 4 4 5 5 4 4 Promotional activities 2 3 5 5 4 4 Purchase location 3 4 3 2 3/4 4 Competition clause 2 2 1 1 2 4 Media-communications 3 4 3 4 4 4 Total (average) 2,6 2,8 3,4 3,5 3,4 4,3

E.3 - How many times a year are you

visited by the franchisor? 6 x 2 x 6 x 4 x 4 x 4 x

E.3.c - To what extent are you satisfied

with the frequency of the visit? 5 5 4 4 5 5

E.4 - Do you participate the franchisor’s

transactional website? No No No No Yes No

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4.3 Within-case analysis

The different cases are analyzed and for each case the main findings of the analysis are presented. To begin with, I give a short description of the case (as is also presented in Table 3) and explain how e-commerce is organized within each chain. Additionally, I shortly describe the franchise relationship and give a description of how the implementation process of e-commerce went to portray the current situation within that case. After that, I present the results of the dependent variable; the franchisees’ response regarding the implementation of commerce with the level of satisfaction regarding e-commerce as a mediator. Subsequently, I look at the impact of the different dimensions of perceived justice and the moderating impact of the standardization level.

4.3.1 Etos

Case description

Etos is the second largest drugstore chain in the Netherlands (largest among the franchise stores) and it is part of Ahold (a big Dutch retail group). Etos is the only one of the three drugstores who does not have its own transactional website (the website of Etos is informational). The assortment of Etos can be purchased online through the website of Albert Heijn (a supermarket chain which is also part of Ahold). The purchases are delivered at home or at an Albert Heijn store (there is no possibility to pick up at an Etos store). None of the Etos franchisees are ‘allowed’ to participate/join the transactional website (i.e. the franchisees do not receive compensation for online sales on the transactional website).

Background information and description implementation process

Etos I is the ‘city’ franchisee and is overall satisfied with the franchise relationship. Etos II is the ‘village’ franchisee and is, overall, also satisfied with the franchise relationship. They both give the relationship a score of ‘4’. As an explanation for this score, both franchisees state that, over the years, the relationship always has been ‘stable’.

Etos I explains he is not informed by the franchisor regarding the plans of implementing e-commerce: “I heard it through the grapevine. It could be that behind the scenes other franchisees or

the Franchise Board knew of it, but I was not involved”. On the other hand, Etos II explains that she

was informed about the implementation of e-commerce during a meeting, but the information regarding the implementation was bad/incomplete. This explains why both franchisees are dissatisfied about the way the franchisor informed them.

Main findings

▪ Franchisees’ response regarding e-commerce implementation:

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on the Franchise Board. As he puts it: “I did not contact the franchisor because I thought (and still think)

this is useless; me as a solitary individual against such a big company. Besides, I think that it is the role of the Franchise Board to ‘speak’ on my (i.e. the franchisees’) behalf. I think and believe that they will do their job and that I do not have to worry about it”. Franchisee Etos II also stated that, according to

her, the Franchise Board is still attempting to find out what they can do for the franchisees regarding e-commerce. In addition, she explains: “at the time of the announcement it was already clear that it would

be useless to go against it”. Both franchisees’ responses can be labeled as a ‘constructive response’;

aimed at reviving or maintaining the relationship.

▪ Franchisees’ level of satisfaction regarding e-commerce:

The level of satisfaction of e-commerce from both Etos franchisees is low. On a scale from 1 (very low) to 5 (very high), they both rated this question with a ‘2’. As an explanation for this score, both franchisees answered poor communication and not being involved in the e-commerce process. Both franchisees think that the transactional website of their franchisor is disadvantageous for their own businesses. Franchisee Etos I even stated the following: “I think I can notice it in the turnover, I just

cannot prove it”.

Because both Etos franchisees have a low level of satisfaction regarding e-commerce, the constructive responses are somewhat surprising. As appears from the results; in both cases the overall relationship with the franchisor is good, they are both dissatisfied regarding e-commerce, but they did not contacted the franchisor at all. Therefore, the franchisees’ constructive responses are in contradiction to what was expected; the less satisfied the franchisee is with the change process (i.e. the implementation of e-commerce) the more destructive the franchisees’ reaction.

▪ Franchisees’ perceived justice during e-commerce implementation:

Regarding distributive justice both franchisees perceive the distribution of benefits/costs and other outcomes regarding e-commerce as unfair (both franchisees rated the related questions with a ‘2’). Both franchisees provided as a reason that it is unfair because there is no ‘distribution’ at all; they (the franchisees) do not profit in any way from the transactional website. As franchisee Etos II put it: “They

(the franchisor) get everything, we (franchisees) get nothing”.

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franchisees put all their ‘trust’ in the Franchise Board and according to the franchisees the Franchise board is still working to found out what they can do for the franchisees regarding e-commerce.

With regard to the interactional justice franchisee Etos II is slightly more positive than franchisee Etos I. As franchisee Etos I put it: “the franchisor did not give any explanation regarding the

implementation process of e-commerce and did not show any interest in my opinion” (score: 1).

Franchisee Etos II stated that the only explanation the franchisor gave was that they could not wait to start setting up a transactional website because of the competition (score: 3). Also, according to her, the franchisor did not show empathy (score: 2), since they said “we are doing it like this, not in any other

way”. These results explain their low scores regarding the perceived ‘fairness’ of the interpersonal

treatment by the franchisor and the ‘fairness’ regarding the communication process. ▪ Perceived standardization level:

Both Etos franchisees have a relatively low degree of freedom within their franchise formula. Franchisee Etos I rated the overall degree of freedom with a ‘2’ and states that the standardization level is very high. His average score on the different aspects regarding ‘freedom’ is 2.6. The scores for franchisee Etos II are ‘3’ and ‘2.8’ respectively. From these results, it appears that the ‘city’-franchisee (Etos I) has a lower degree of freedom, which means a higher level of standardization compared to the ‘village’-franchisee (Etos II).

If we compare the level of standardization of the two Etos franchisees to the other variables, it appears that there are no major differences between the results of Etos I and Etos II. In fact, the scores are relatively comparable. Etos I is not more critical regarding the implementation process than Etos II, because he has a higher level of standardization. On almost all of the scores, both Etos franchisees scored extremely low (i.e. negative/ dissatisfied regarding e-commerce and the way e-commerce was implemented). Moreover, both franchisees perceived the overall implementation process as ‘unfair’. Therefore, for the within-case analysis, the level of standardization has a low moderating effect on the variables perceived justice and level of satisfaction.

4.3.2 DA

Case description

Turbulence in Franchise: