Managing the relationship between
Franchisor and Franchisees through a
Franchise Advisory Council
The satisfaction of franchisees with their
Franchise Advisory Council
By
Martine Calkhoven m.h.b.calkhoven@student.rug.nl
Student no.: 1849735
University of Groningen Faculty of Economics and Business
Postbus 800, 9700 AV Groningen
Msc BA Master Thesis
Small Business & Entrepreneurship
5 April 2011
Supervisors Dr. E.P.M. Croonen
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Abstract
This study is about the factors that influence the satisfaction of franchisees with their franchisee advisory council (FAC). Franchisees can participate in decision making in the franchise system through, for example, a franchisee advisory council. Based on my research, it can be concluded that multiple factors cause franchisees to be satisfied with their FAC.
Examples of those are perceived management support, selection procedures of the members, and means of communication. It appeared that the perception of having a formal plan is the most important factor that leads to the satisfaction of franchisees with a FAC.
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Content
1. Introduction ... 5 1.1 Problem definition ... 7 1.2 Thesis Outline ... 10 2. Literature review... 122.1 Forms of employee participation... 12
2.2 Franchisee participation... 14
2.2.1 Comparison employee and franchisee participation ... 14
2.2.2 Franchise Advisory Council... 15
2.3 Work council ... 16
2.3.1 Functions work council... 17
2.3.2 Factors realizing employees’ satisfaction with a work council ... 18
2.4 Research model ... 23
3. Methodology... 25
3.1 Research method ... 25
3.2 Data collection... 26
3.3 Structure of the Interviews... 26
3.3.1 Administrative questions... 26
3.3.2 General questions ... 27
3.3.3 Specific questions... 27
3.4 Structure of the survey... 28
3.4.1 Administrative questions... 28
3.4.2 General questions ... 28
3.4.3 Specific questions... 28
3.5 Methods data-analyses survey ... 29
4. Case study Sunday’s... 31
4.1 Results exploratory interviews ... 31
4.1.1 Factors important according to interviewees ... 31
4.1.2 Outcomes per factor... 32
4.1.3 Conclusion exploratory part ... 35
4.2 Results survey ... 38
4.2.1 Descriptive sample... 38
4.2.2 Analyses per factor ... 41
4.2.3 Relations between factors and satisfaction ... 42
4.2.4 Factors important according to franchisees ... 45
5. Discussion and recommendations... 47
5.1 Discussion ... 47
5.1.1 Discussion of factors... 47
5.1.2 Tested research model... 52
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5.2.1 Research limitations and further research ... 54
5.2.2 Practical implications ... 55 References... 56 Appendixes ... 59 1. Questionnaire interviews ... 59 2. Items survey ... 62 3. Variables... 65 4. Questionnaire survey ... 69
5. Organization of FAC Sunday’s ... 77
6. FAC manual Sunday’s... 79
7. Output SPSS research methods ... 83
8. Output SPSS descriptive sample ... 84
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1. Introduction
According to Caves and Murphy (1976) a franchise agreement can be defined as “one lasting for a definite or indefinite period of time in which the owner of a protected trademark grants to another person or firm, for some consideration, the right to operate under this trademark for the purpose of producing or distributing a product or service”. Within the franchise context there are three forms of franchising. First of all, there is the product-distribution and trade-mark franchising, which are referred to as the so called “first generation” form of franchising, and business format franchising which is referred to as the so called “second generation” form of franchising (Kneppers-Heijnert, 1988). The first generation form of franchising means that the owner of a product or trade-mark permits dealers to sell the product or deal with the trade-mark. The second generation form of franchising means that a franchisor owns a business format and replicates it by allowing others (franchisees) to use it in return for fees. This business format entails a shared identity toward customers, and the operating procedures are determined in detail (Croonen, 2006). The focus of this paper is on business format franchising, because within this form of franchising the franchisees and franchisor are closely linked together and, as discussed below, a way of mutual participation might be necessary.
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procedures, the franchisees have limited ability to decide themselves so they want to be able to protect their interests, and they want their interests to be taken into account in strategic decisions or changes (Croonen, 2010).
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willingness of the organization and the skills of the supervisor in fostering direct participation quality, contribute to employees’ positive attitude towards the overall employment relationship. More over, it can be concluded that the overall organisational performance will improve.
As discussed above a lot is known about the importance of participation of employees in general, but at this moment little is known about participation in franchise systems through, for example, Franchisee Advisory Councils (explained in detail in paragraph 2.1) (Croonen, 2010; Cochet & Erhmann, 2007). A franchise organization is a specific situation, where entrepreneurs work under an existing business format. There is no reason to believe that the importance and effects of participation are different in a franchise context than in normal organizations. If franchisees are satisfied with the participation their positive attitudes towards the overall franchise relationship will increase, and the overall performance will improve. In this paper I will look for the factors that are important for the satisfaction of franchisees with the FAC. A FAC is a way for franchisees to participate in decision making regarding their organization, which is set up by the franchisor. Besides the FAC franchisees can also unite together in Independent Franchisee Associations (INDFAs). The FAC and the INDFAs both represent the interests of the franchisees, but are significantly different entities. Lawrence and Kaufmann (2009) described these differences as follows: “FACs are corporate funded and supported groups typically made up of appointed or approved franchisees; while INDFAs are independent non-profit organizations, most often the product of a grassroots effort to foster community and power among independent franchisees.”.
1.1 Problem definition
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and satisfaction of employees in organizations. The main research question of this study is: “Which factors influence a franchisee’s satisfaction with the FAC?”.
To answer this main research question, several sub questions are developed. The relevance of the following sub questions is described, and the way the questions are answered is given. Questions 1-4 are the theoretical questions and 5-7 the empirical questions:
1. What forms of employee and franchisee participation exist?
In paragraph 2.1 the several forms of employee participation will be discussed. The link between employees and franchisees and the work council and a FAC will be explained in paragraph 2.2. I will translate the knowledge about participation and work councils into a franchise and FAC context.
2. What is a Franchisee Advisory Council (FAC)?
Since the main subject of this thesis is the franchisee advisory council (FAC), it is important that a clear definition of a FAC is given. Based on the findings in the literature the characteristics and functions of the FAC are described in this part. The functions of the FAC (with franchisor) are also compared to the functions of Independent Franchisee Organizations (without franchisor). Thirdly, the differences and similarities between the FAC and work councils are discussed, since these two participation mechanisms can be very similar. These comparisons must lead to a positioning of FACs compared to other participation mechanisms, and to a clear definition of FACs. This sub-question is answered in paragraph 2.2.
3. Which factors for satisfaction of employees with the work council are determined in the current literature?
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4. Which factors in the theory determine the satisfaction of franchisees with the FAC?
The previous sub-questions are together the theoretical part of this thesis. During sub questions 1 till 4 the focus will narrow from employee participation in general to the work council and then the link with the FAC is made (figure 1). At the end, factors important for the satisfaction of franchisees with the FAC will be determined in paragraph 2.3. After answering these questions a model will be developed based on the theory in paragraph 2.4. After developing the model a case study will be preformed to test the model for empirics. This case study will be preformed at Sunday’s.
Figure 1 Narrowing of focus sub questions
Case study Sunday’s
It is very important to know which factors are important for the franchisees in organizing a FAC, so that franchisees are satisfied. To answer this question a case study will be done at Sundays to see how franchisees think about their FAC and which factors are important according to them. In this case study the following sub questions will be discussed in chapter 4.
5. Does the model of franchisee satisfaction with a Franchisee Advisory Council need to be adjusted?
After the model is developed in the literature study, new factors to satisfy franchisees with their FAC might be discovered in the case study. Through interviews with selected franchisees the theory is tested and the model might be adjusted. To answer this question, the outcomes of the interviews will be examined and compared with the previous model. Then it will be determined if adjustment of the model is needed. After the interviews a survey is performed among the franchisees of the case organization, to test the revised model. The outcomes of the analyses of the data of the survey will be compared with the revised model, and if needed adjustment of the revised model will be done.
Employee participation Work council
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6. With which factors are the franchisees satisfied and with which not and why?
Looking at the research factors, it is interesting to see if the franchisees of Sunday’s currently are satisfied with the factors and, more important, why they think about it that way. The arguments of the franchisees about why they are satisfied, or not, can be used to adjust the model or the meaning of a factor.
7. Which factors are important for the satisfaction of franchisees with the FAC according to the franchisees?
Next to the analyses of the data about the previous determined factors, the franchisees are also asked about the factors they think are important to see if new factors need to be added to the research model.
1.2 Thesis Outline
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Figure 2 Thesis outline
In figure 3 the connection between the research questions is presented.
Figure 3 Connection research questions Empirical part (ch. 4)
Research questions 5-7 Case study Sunday’s: organization, important factors determined by franchisees, satisfaction of franchisees Theoretical part (ch. 2) Research questions 1-4 Literature study: Employee participation, Work councils and Franchise advisory
councils. Comparison of theory
and practice (ch. 5) Question 8:
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2. Literature review
This research considers the organization of a satisfactory FAC, as pointed out in chapter one. To answer the research questions it is important to know how the literature sees the factors that are necessary to organize a FAC so franchisees are satisfied. In the scientific literature nothing is written about the organization of a FAC, and how this need to be organized so franchisees are satisfied with the FAC. Therefore, the literature of work councils and employee participation and satisfaction is reviewed to determine the factors.
The outline of this chapter is as follows: In paragraph 2.1 the different forms of employee participation are discussed. The main subject of this thesis is the franchisee advisory council is, so it is important to give a clear description of what a FAC is. This is discussed in paragraph 2.2 after the detailed description of the link between a work council and the FAC. In paragraph 2.3 the important factors for the satisfaction of employees/franchisees with a work council and FAC are being discussed. The research model will be given in paragraph 2.4.
2.1 Forms of employee participation
According to Hespe and Wall (1976) the term participation refers to “the involvement and influence of one group of individuals in decision-making processes which are customarily the prerogative or responsibility of a different group of individuals.”. In previous literature (e.g. Goodijk and Sorge, 2005; Summers and Hyman, 2005) many approaches of participation are discussed. Goodijk and Sorge (2005) distinguish several forms of participation within an organization. For these forms they determined three dimensions which together entail the form of participation.
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meetings, improvement teams, temporary project groups, performance interviews, and other HRM-instruments. In communication and information focussed participation the focus is on informing and consultation of employees. This can be reached through employee questionnaires, forms of digital communication, round table conversations, and canteen meetings. In addition to the indirect and direct forms of participation Van het Kaar and Looise (1999) also describe an other form of participation, namely the financial participation e.g. profit sharing, stocks and shares. This form of participation is being used in an increasing degree within organizations, but at the time of research this way of participation was still more an exception than a rule (van het Kaar and Looise, 1999). Within this thesis, this financial form of participation is not taken into account.
The second dimension is about the formal or informal form of the participation. Informal participation is a supervisory style characterized by participativeness, supportiveness, and openness and is based on organizational norms or customs and has no legal standing whereas with formal participation there is a legal standing. Informally participative supervisors have no obligation to share decision-making power with their subordinates and the issues subject to participation concern the shop floor and not organizational policy, and with formal participation these subjects of participation are more linked with the policy (Nightingale, 1981).
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Table 1 Positioning of work councils and FACs in participation
There are multiple forms of employee participation as shown above in table 1. Work councils are a formal and indirect form of employee participation within an organization, and the initiative is by the employer. As will be discussed in paragraph 2.2 the same kind of participation exist for a franchise organization, namely the FAC. Because of this link the comparison with the work council is being made during the literature review.
2.2 Franchisee participation
As discussed above, there is a link between employee participation and franchisee participation. In this paragraph the forms of franchisee participation will be discussed in a detailed comparison between employee participation and franchisee participation. After that, the FAC will be described in detail.
2.2.1 Comparison employee and franchisee participation
At this moment there is nothing written about which factors are important for the satisfaction of franchisees with their FAC, that is why I build on the literature about work councils. FACs and work councils show similarities and differences as shown in table 1. The main similarities are that they both are forms of formal-indirect participation, both are established by the policy makers of the company, both can negotiate difficult issues with the management of the organization, work within the organization on issues, and help introduce new ideas between corporate and the network. Besides that, both councils are corporate funded and must be seen as consultation partners (Goodijk, 1993; Goodijk & Sorge, 2005; Anderson, 2002). The main difference between FACs and works councils is that works councils are obliged by the law for organizations with 50 employees or more in the Netherlands therefore there are rules which have to be taken into account (art.2 WOR), and there is no obligation by
Formal Informal
Direct (mostly individual)
Staff and management meetings
Interviews, dialog groups, internet communication and
suggestion boxes Indirect (mostly
collective)
Work council and Unions/ FAC and independent franchisee organizations
Management-representative meetings outside formal
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law for FACs. In addition to the work councils and FACs, also the trade unions and independent franchisee associations are shown in the table. These two entities represent the employees or franchisees as well, but the main difference to the work councils and FACs is the fact that they are established by the employees and franchisees themselves. Also the funding and the functions of these entities is different. Next to the work councils and FACs there are trade unions and Independent Franchise Association (also shown in table 2). Work councils and FACs are the internal form of participation where the initiative is by the employer or franchisor, and the trade unions and Independent Franchise Association however, (discussed in chapter 1) are the external form where the initiative is by the employees or franchisees. Since this research is focused on the relationship between franchisor and franchisees and the franchisor is not involved with the Independent Franchise Association this form of uniting of franchisees is not included.
Table 2 Differences and similarities FACs, work councils, INDFA and Trade unions (Goodijk, 1993; Goodijk & Sorge, 2005; Laurence & Kaufmann, 2009; Anderson, 2002).
2.2.2 Franchise Advisory Council
One of the ways to achieve the trust and fairness that is needed in the franchise system, is to develop a FAC whose input is seriously considered in decision-making (Cochet and Ehrmann,
Franchisee advisory council
Work council Independent franchisee associations
Trade Unions
Establishment Franchisor Employer Franchisees Employees Members Franchisees Employees Franchisees Employees Goal To look after the
interests of franchisees
To look after the interests of employees
To look after the interests of franchisees or to fill the gap if there is no FAC
To look after the interests of employees
Function Strategic decision, participation, and consultation partner Strategic decision, participation, and consultation partner Controlling, Resolution of strategic issues Controlling, Resolution of strategic issues
Funding Corporate funded Corporate funded Independent, non-profit Independent, non-profit Enforcement Collective punishment Enforcements
determined by law
Collective punishment Collective punishment
Establishment obligation
Not obliged Obliged by Dutch law at companies with 50 employees or more (art. 2 WOR 1998)
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2007; Leunissen, 1998). A Franchisee Advisory Council (FAC) is a body that looks after the interests of the franchisees and serves as a communication platform where franchisees can verify that the franchise head office applies control mechanisms in a fair and non-discriminating way, new ideas concerning the system’s value proposition can be discussed, franchisees can informally provide input into different operational and strategic aspects, and there can be negotiated in mutually beneficial ways on critical issues (Cochet and Ehrmann, 2007; Leunissen, 1998). As discussed by Leunissen (1998) a FAC acts when there are conflicts between the franchisor and franchisee, for example about fees to pay, and they look after the continuity of the business format. The FAC can also improve the communication between the franchisees and the franchisor and also bilateral between the franchisees (Leunissen, 1998).
As discussed by Cochet and Ehrmann (2007) FAC’s not only offer a platform to diminish vertical information asymmetries between the franchisor and the franchisees and strengthen enforcement against the franchisor through the threat of collective punishment by all, or at least a majority, of franchisees, but also between the franchisees horizontally. Councils can provide the framework to agree on a common interpretation of the system’s obligations and the franchisors requirements and to gather information on conflicts occurring in the channel. A work council can also act as a negotiator in case of disagreements between franchisees and the franchisor (Cochet and Ehrmann, 2007).
2.3 Work council
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definition of Goodijk (1993) influence in strategic issues and participation should be added in the definition of Carley et al (2005).
In the Netherlands, work councils have an acquired an accepted position within organizations (Goodijk, 1995, Goodijk 2000). They all operate differently within each organization, but in general the work councils make a considerable contribution to the decision making process. In this paragraph, functions of a work council and the factors that are needed to realize a work council where employees are satisfied with will be described in 2.3.1. After that the factors will be explained in detail and translated into factors important for the satisfaction of franchisees with their FAC in 2.3.2.
2.3.1 Functions work council
According to Goodijk and Sorge (2005) the functions of a work council have changed over the last decades. In the past, work councils mainly brought up injustices and shown dissatisfactions, whereas nowadays work councils mainly are more involved in organizational developments. Also in the past the differences between employees and managers were stressed and emancipation and political and social goals were points of interest. Now there is more equality and employees are more independent, the focus is more targeted on involvement, communication, and change within the organization which can increase the satisfaction of employees. Out of several literature sources multiple factors for the satisfaction of employees with their work council came forward. In table 3 these factors are shown.
Factors Authors
Perceived management support Goodijk, 1995; Goodijk, 1998; Goodijk 2005; van het Kaar and Looise, 1999; Rigby et al, 2009
Quality of information provision Goodijk, 1993; Goodijk, 1995; ; Goodijk, 1998; Goodijk 2005; Goodijk & Sorge, 2005; Rigby et al, 2009
Quality of communication Goodijk, 1993; Goodijk, 1998; Goodijk, 2005; Goodijk & Sorge, 2005; Rogelberg et al, 2010; Van het Kaar and Looise, 1999; Whittall et al, 2009
Presence of formal plan Goodijk, 1993; Goodijk, 1995; Goodijk, 2005; Goodijk and Sorge, 2005; Rigby et al, 2009
Control of Work Council’s activities Goodijk, 1995
Quality of selection Work Council members Goodijk, 1993; Croonen, 2010 Quality of Work Council members Margulies and Black, 1987
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2.3.2 Factors realizing employees’ satisfaction with a work council
The factors important for the satisfaction of employees with their work council are discussed and explained in detail. These factors are important to create a good work council and to satisfy all the employees in an organization. These factors are also important for the FAC and the satisfaction of franchisees with the FAC, so the link to the FAC and the franchisees is also made by the explanation of each factor. At the end of each explanation of the factors propositions are given, which will be tested in the case study.
Perceived management support
The success of a professional good working work council not only depends on the choices the council makes, but also on the willingness of the management board to operate with the work council (Goodijk, 1995). According to van het Kaar and Looise (1999) the participation of a work council is strongly dependent on the management. According to Rigby et al (2009) the dependency of the management is one of the most common reasons of failing of a work council. It is important that both parties know each others’ ideas and visions (Goodijk, 1993; Goodijk, 1998; Goodijk, 2005; van het Kaar and Looise, 1999). Both parties should be interested in the ideas and proposals of the other, and the management should dare to bring own ideas up for discussion (Goodijk, 1998). A management team also should agree on development paths for the future with the work council. Finally time and facilities should become available for the work council and their members (Goodijk, 1998). If these factors are there not only the members of a work council are satisfied, but also the employees in general. If the management is willing to work with the work council, it is worth having a work council. Otherwise the employees get the perception that the work of a council is not useful. Linking this theory to the FAC, this will work more or less the same. If the franchisees have the perception that the franchisor is not willing to participate with the FAC, the franchisees will not get satisfied with the FAC since the work done by the FAC will not be useful.
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Content of information
The management has to provide information (Rigby et al, 2009), especially in an early stage and not only aim at short term results but especially at a good (strategic) consultative relationship and hold discussions on matters of strategy (Goodijk 1995, Goodijk 1998, Goodijk 2000). It is reasonable that if the work council gets the information in an early stage the work council can deliver better work, and that will increase the satisfaction of employees with the work council. Ways to realize this relationship and information gathering is with the modern communication tools, surveys, regular meetings and involving employees in project groups as discussed below (Goodijk & Sorge, 2005; Goodijk, 1993). At time of research the given organizational information to a work council is generally bad in the Netherlands according to van het Kaar and Looise (1999). It is reasonable that everything related to information provision works more or less the same for FACs.
P2: If franchisees perceive that the content of information of the franchisor is relevant, franchisees will be more satisfied with their FAC.
Means of communication with FAC
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and-file. If the employees get the feeling that they have a good relationship with the work council, that there is no distance and that their opinions are being taken into account, the satisfaction of the employees will increase. The work council should make use of the modern communication technologies for a better feedback and rendering account. A research conducted by Goodijk and Sorge (2005) shows that many larger organizations make use of the internet for the internal communication of the work council, but also towards the rank-and-file. Especially when an organization has multiple plants, like international organizations, ICT is needed since it transforms the speed of communication, provides a level of transparency, and creates trust and bonding between members which are geographically dispersed (Whittall et al, 2009).
Linking this to a FAC, the communication between the franchisor and the FAC, and between the FAC and the rank-and-file is reasonably the same. And the use of ICT in the communication will be important as well. A franchise system can be compared to an organization with multiple locations which are geographically dispersed. The quick communication between the FAC members, and with the other franchisees will increase through ICT. The franchisees will reasonably be more satisfied when there is quick communication and when they can know quickly what issues are going on in the system.
P3: If franchisees perceive that the communication between the franchisor and the FAC and the FAC and the franchisees is of a satisfying level, franchisees will be more satisfied with their FAC.
Presence of a formal plan with clearly established rights and responsibilities
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determined and a time path so no ad hoc decisions are being made but policy based decisions (Goodijk 1995, Goodijk and Sorge 2005). Also the work council must not wait till the management board involves them, but has to show initiative themselves (Goodijk 1995). They can signal important problems or discuss developments in meetings with the management board. In this way the work council can influence the plans of the management in an early stage (Goodijk, 1993). Linking this theory to the FAC, this will reasonably work similar. If the franchisees know what the FAC’s vision and subjects of interest are the franchisees will reasonably be more satisfied than when no vision is determined. So the presence of a plan for the FAC is important with inclusion of the priorities, responsibilities and mission statement. In other words: there has to be a FAC manual.
P4: If franchisees perceive that there is a formal plan with the goals and vision of the FAC, franchisees will be more satisfied with their FAC.
Verification of the FAC’s activities
One of the tasks of a work council is the verification if the made agreements are being accomplished. In order to check the discussed policy the work council should focus on the next points: if the policy is being accomplished, what bottlenecks occurred and what it means for the future policy. There are several ways how the work council can check. First of all there has to be a clear statement with the policy agreements and responsibilities. Then the implementation of the policy needs to be checked based on periodic (monthly or quarterly) progress reports. For the work council, the employees are the most important basis to collect the information about implementation of the policy. In order to get all the needed information several methods of signalling can be used, like questionnaires, through a proper relationship with the employees, and work meetings (Goodijk, 1995). In this way, through the meetings and good relation the employees can control the work of a work council as well. Linking this theory to the FAC, this will reasonably work similar. If the franchisees have the perception that they can verificate the work of the FAC, the franchisees will reasonably be more satisfied than when verification is not possible.
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Quality of procedures on selection of FAC members
According to Goodijk (1995) it is important that there is a regular change in members in work councils. This to make sure that the work council does not become a fixed group of people that decides for the rest. Research performed by Croonen (2010) revealed that the trust of the other franchisees in the FAC decreased when franchisees were member of the FAC for a long period of time (Croonen, 2010). Franchisees who are involved in the franchisee advisory council are close to the management. Through their close contact they receive more information about the organization and decisions that are being made. These franchisees have a higher degree of trust compared to other franchisees. Not only the franchisees receive more information through the close contact, they are also more easily to convince by the franchisor of the need for certain (strategic) decisions (Croonen, 2006). Participation through FACs only works properly when they are organized clearly and fairly (Croonen, 2006). Linking this theory to the FAC this will work more or less the same. If the franchisees have the perception that the procedures on the selection of FAC members are of a good quality the franchisees will reasonably be more satisfied than when they perceive that the procedures are not of a good quality.
P6: If franchisees perceive that the procedures on the selection of FAC members are of a good quality, franchisees will be more satisfied with their FAC.
Quality of FAC members
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P7: If franchisees perceive that the FAC members have the required skills and knowledge, franchisees will be more satisfied with their FAC.
FAC members representativeness
The members of a work council should be a reflection of all employees of an organization. In this way the work council can represent the opinions of all the employees (Goodijk & Sorge, 2005; Goodijk, 1993). For a work council it is important that there is a good relationship with the employees, the employees that the work council represents, and that the members of the work council are a good representative of all employees. A research performed by van het Kaar and Looise (1999) showed that contact between the rank-and-file and the work councils is not intensive. The influence of the employees in the work of the work councils is often low, and employees feel a distance with the work council members (van het Kaar and Looise, 1999). Linking this theory to the FAC, this will work more or less the same. If the franchisees have the perception that the FAC members are a good reflection of all the franchisees the franchisees will reasonably be more satisfied than when they perceive that the FAC members are a not a good reflection.
P8: If franchisees perceive that the FAC members are a good reflection of the franchisees, franchisees will be more satisfied with their FAC.
2.4 Research model
Figure 4 Research model franchisees satisfaction with the FAC
Franchisee’s satisfaction
with the FAC
Perceived management support
Content of information provision
Means of communication
Presence of a formal plan
Verification of FACs activities
Quality of procedures on selection FAC members Quality of FAC members
3. Methodology
3.1 Research method
The goal of this research is to develop a theory about the factors influencing a franchisees’ satisfaction with the FAC and to test this theory. The first part of the empirical research is a qualitative part where the theory of chapter 2 is developed further, whereas the second part of the empirical research, the quantitative part, is to test the theory. Triangulations is the term to describe the combining of qualitative with quantitative methods. Combining these types of methods the characteristics of both can increase the quality of the research. Especially when the quantitative study follows the qualitative one, and provides a validation for the qualitative findings. In the following paragraphs descriptions of how the information from this research is gathered are discussed.
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for analyses (Cooper and Schindler, 2008). As mentioned earlier, a case study is executed. According to Cooper and Schindler (2008) a case study is a powerful research methodology that combines individual interviews with record analyses and observations. In a case study the objective is to obtain multiple perspectives of a single organization, situation or event at a point of time or a period of time and can be used to understand particular processes (Cooper and Schindler, 2008). In this research the organization I perform my case study is Sunday’s. In chapter 4 more information about this organization will be given.
3.2 Data collection
I have executed five exploratory interviews. In this franchise organization I have chosen to do the exploratory interviews with five franchisees, of which three are members and two are non-members of the franchise advisory council. The franchisees were approached by asking the franchisor of Sunday’s for franchisees. I wanted two members and two non-members, of who two are located near the headquarters, two who are located further away from the headquarters, and one who is unsatisfied with the FAC. Preferably the interviewees were selected on satisfied and unsatisfied with the FAC, but since no clear information of this factor is available location is the second best option. Only from one franchisee the dissatisfaction was already known so I interviewed him to see if different factors were mentioned. During these interviews I want to get more information about the FAC of Sunday’s. Furthermore I wanted to see if the factors I determined in the literature research in the research model were complete. After the interviews, a survey was performed to test the research model developed so far.
3.3 Structure of the Interviews
The purpose of the interviews was to complete and validate the findings from the literature and get an idea of the work of the FAC and opinions over multiple subjects. That is why the interview scheme is based on the conceptual research model. The global design of the interview scheme and the argumentation of the design are described below. The interview scheme for the interviews can be found in appendix 1.
3.3.1 Administrative questions
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indentify patterns of possible mistakes. As the wrong target group for example (Cooper and Schindler, 2008).
3.3.2 General questions
Both schedules are divided into several subjects. To prevent the respondents to give their biased opinion about the subject, a free reaction strategy is applied. This free reaction strategy makes it possible for the respondent to formulate a complete own answer without being biased by other information (Cooper and Schindler, 2008). That is why the first question of each subjects is an open question. After that, some sub-subjects are pointed out which start with an open question as well in the interview schedule.
3.3.3 Specific questions
After the open general questions, the interview is structured with specific questions. Specific question are concerned with the content of the research (Cooper and Schindler, 2008). The questions in this research are structured with semi-fixed questions. The respondents can give their answer to the questions (yes/no) and then they had to give their own argumentation about why they answered yes/no and what they think can be changed. An advantage of semi-fixed questions is that all the questions concerned with the content are asked, but the respondents are also able to give a clear argumentation on their choice. A disadvantage is that these argumentations can lead to a lot of respondent-specific answers, which can lead to difficulties with the processing of the results (Emans, 2004).
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3.4 Structure of the survey
For the survey among all franchisees a survey scheme is made. The purpose of the survey is to complete and validate the findings from the literature and the interviews. That is why the survey questionnaire schedule is based on the conceptual research model and the earlier performed interviews. The global design of the survey and the argumentation of the design are described below.
3.4.1 Administrative questions
The survey also starts with administrative questions. The goal of these administrative questions is to identify the participant and the link with Sunday’s. Next to the questions needed for the research, also some questions are inserted for one of the supervisors. That are the questions B1 till B20.
3.4.2 General questions
To get an overview how the franchisees think about the FAC in general and the several sub subjects, rating-questions will be used. For these questions a 10- point numerical scale will be used (Cooper and Schindler, 2008). The respondents had to write down a grade corresponding their opinion about an subject.
3.4.3 Specific questions
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Element of survey Items covered
1 Characteristics franchisees - Demographical characteristics - Entrepreneurial characteristics
2 Rating questions Grades:
- Satisfaction with FAC
3 Factors of research model Rating of questions analyzed per factor
4 Open question Important factors according to franchisees
Table 4 Structure of survey
3.5 Methods data-analyses survey
The survey is analysed in several ways. The goal of these analyses is to test if the model, developed during the literature study, and refined during the interviews, is correct.
Step 1
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Step 2
Per factor the average rate given to the related questions is calculated to look at the opinions of the franchisees per factor. All the rates are calculated in the same way as the entrepreneurial characteristics are calculated. For a representative analyses the Cronbach´s alpha needs to be over 0.6, appendix 7 the alpha´s for the factors are shown. For the selection of members I excluded 1 item (question C1) to raise the alpha from 0.515 to 0.583. For the quality of members and representativeness of the members, no items could be excluded, so these alpha´s are to low.
Step 3
A correlation analysis is done with the individual model factors to look which factors are related to each other. This analysis is performed to see if some factors are strongly related and need to be united together. Next a multiple regression is performed to determine the relation between the factors in comparison to the satisfaction of the franchisees with the FAC.
Step 4
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4. Case study Sunday’s
Sunday’s is a Dutch franchise organization of solarium studio’s which started in 2000. The form of franchising of Sunday’s is business format franchising. The headquarters of Sunday’s is located in Wateringen and there are currently 69 establishments with 49 franchisees throughout the Netherlands. In this chapter the results of the exploratory interviews will be discussed and the revised research model will be given. Then finally the results of the survey will be given. In appendix 5 a description about how the FAC of Sunday’s is organized is presented and appendix 6 provides the official FAC manual (in Dutch).
4.1 Results exploratory interviews
In this paragraph the results of the exploratory interviews are discussed. First the factors mentioned by the interviewees are being listed The most important factors through the eyes of the interviewed franchisees are presented. This paragraph ends in a revised conceptual model. This conceptual model is used as an input for the survey among all the franchisees.
4.1.1 Factors important according to interviewees
In table 5 the level of satisfaction of the interviewees with the FAC is given with the arguments of the grade. With an average just under 5.5 on a scale of 1 to 10 the franchisees are in the middle of being satisfied or being unsatisfied.
Franchisee 1 Franchisee 2 Franchisee 3 Franchisee 4 Franchisee 5
Grade 4-5 6 5 5,5-6 6 Argu- ments The FAC is an meaningless institute. Sunday’s determines everything and the FAC only may listen and advise
In general satisfied, only the organization can be more tight and better defined on what the FAC may participate and on what not.
A bit in between, often Sunday’s does not listen to the FAC and its rank-and-file. And the FAC does not help individual franchisees. In general satisfied, the design of the FAC is right, but the outcomes of the FAC are not satisfying.
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During the interviews it came forward what the interviewees thought which factors were the most important for the satisfaction of franchisees with the FAC. In table 6 the five factors mentioned by each interviewee are given.
Franchisee 1 (non-member) Franchisee 2 (member) Franchisee 3 (non-member) Franchisee 4 (member) Franchisee 5 (member) 1 Participation on organizational decisions Sunday’s should listen and give the FAC some influence Participation on organizational decisions Participation on day to day management Participation on day to day management 2 Open information distribution More openness and honesty More openness and transparency Correctness of minutes Correctness of minutes 3 Open communication in both directions Good communication about developments Region meetings should be independent and less confusion of interests Mutual contact of FAC members before meetings Mutual contact of FAC members before meetings 4 Insights in (financial) organization and information Give arguments for decisions Rank-and-file closer to be stronger (Financial) Independent members (Financial) Independent members 5 Trust in franchisor
and that franchisor is not only
interested in own profits.
Members change every 2 years and obligate all franchisees to keep them active
Practical point of view should be taken in account during meetings, not profit franchisor Good level of members capabilities Good level of members capabilities
Table 6 Important factors given by interviewees
The factors mentioned by the franchisees often are linked to factors determined in the literature study. Almost all of the factors being important for the satisfaction of franchisees with the FAC mentioned by one of the franchisees are also pointed out by the other franchisees. Often the factors being important are linked to each other in a way. The basis of most of the factors is the same, but the precise meaning differ. During the interviews it clearly came forward that some factors are more important than others for the satisfaction of franchisees with the FAC.
4.1.2 Outcomes per factor Perceived management support
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according to two franchisees interviewed, most of the influence right now is through an advocate hired via a independent association they founded in 2008 since many franchisees had the idea that Sunday’s only was interested in their own profits and provided the franchisees with no information about organization decisions. The franchisees have the feeling that Sunday’s does not listen to the opinions, and the opinions are not taken into account when making decisions. They feel that Sunday’s pushes through its own plans and sometimes only makes small adjustments if a majority of the franchisees is not satisfied. If franchisees do not perceive any management support a FAC will be useless no matter how it is organized. On the question of what can be improved on the participation of the FAC all of the franchisees answered that the FAC should be able to participate more and Sunday’s should pretend like they are listening more. Now all of the franchisees think that the FAC has no meaning and that it often is a waste of time and energy to contribute to it.
Content of information provision
The interviewees all said that Sunday’s does not provide much information, and the information provided is often not detailed and open in their opinion.
Means of communication
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franchisor makes the agenda of the FAC meeting on the basis of the discussed issues in the regions meetings and region representatives can add issues by emailing the franchisor. But they think the franchisor screens the issues he actually adds. All of the franchisees are not satisfied with one or both of the meetings due to several reasons. All of them mentioned that the franchisor does not listen to the franchisees. One of the franchisees noticed that due to the presence of the franchisor at the region meetings, not the real opinion of the franchisees is discussed and presented to the region representatives. Two other franchisees said that through the presence of the representative of Sunday’s the meeting are better than in previous years and, if franchisees want, the franchisor can be asked to go away to discuss things in ‘private’.
Presence of a formal plan
Comparing the FAC manual of Sunday’s about how the FAC is organized with the experiences of the franchisees, it appears that all of the franchisees are familiar with the way it supposed to be organized, but the procedures are not being accomplished as written. The most often mentioned difference is that for the members not always electing is, but often it is just who wants or who is being asked by Sunday’s or previous representatives. Another difference is that not all members change after two years. Sometimes shorter, but often members are longer in the FAC. The reason for the fact that members stay longer and not always are elected, is that most of the franchisees are not interested in becoming member, since a lot think it is not worth the time and waste of energy.
Verification of the activities of FAC
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Quality of selection of the FAC members
As discussed before, the selection of FAC members often works differently than determined in the FAC manual. Often members are not selected through election but often it is just who wants or who is being asked by Sunday’s or previous representatives. The franchisees interviewed mentioned that they have the feeling that the members are often friends of the franchisor and not represent the franchisees well.
Quality of the FAC members
The interviewees mentioned that the level of skills and information of the members is important for the other franchisees to become and stay satisfied with their FAC. Several of the interviewees mentioned that the skill level of some members is not high enough. They reasoned that since the skill level is not sufficient, the FAC can not be strong, because the members are not able to represent the rank-and-file properly.
The representativeness of the FAC members
Through the fact that some members are longer in the FAC, four of the franchisees feel that FAC members are a selected group of persons, especially since one of the members is also shareholder of Sunday’s. Through this, some of the franchisees interviewed feel that there is a large confusion of interest within the FAC and Sunday’s. Because of this the franchisees think that the selection procedure should go as written in the manual and some of the franchisees think that maybe membership of the FAC should be obligated.
4.1.3 Conclusion exploratory part
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franchisees and participation in the decision making are not good, it does not matter how for example the members are selected or if there is a formal plan present.
The precise meaning of the factors is sometimes further developed. An example is the control of the activities of the FAC. Franchisees mentioned the accuracy of minutes of the FAC meetings, so the franchisees can control what is discussed during the meetings and the activities of the FAC. During the literature study, it already became clear that the activities should be controllable, but during the interviews the franchisees mentioned that the minutes should be accurate to be able to control the activities of the FAC, since those are the ones that make it able for the other franchisees to see what is discussed and what is arranged.
Figure 5 Revised research model
Franchisee’s satisfaction with the FAC Perceived mgt support
Content of information provision
Means of communication
Presence of a formal plan
Verification of FACs activities
Quality of procedures on selection FAC members Quality of FAC members
4.2 Results survey
For the survey I send out 51 questionnaires, of which two were send wrong. One franchisee received two questionnaires instead of one and one was addressed to a franchisee who was no longer a franchisee of Sunday’s. For the calculations I assumed that 49 questionnaires were send of which 26 returned. So the return rate is 53.1%. The franchisees who responded to the questionnaire represent 37 studios together. In this paragraph first descriptive information about the sample and the satisfaction of the franchisees is given. Secondly, the relations between the factors and between the factors and the satisfaction with the FAC is discussed. Then, the analyses of the survey per factor are being discussed. After that, the factors given by the franchisees as being important for the satisfaction of franchisees with their FAC according to them are discussed. All the comments of franchisees in this paragraph are made in the survey.
4.2.1 Descriptive sample
In this paragraph the sample of the franchisees is being discussed, this is step 1 of the data analyses. In appendix 8 output of the analyses related to the sample can be found. Out of the responding franchisees 76.9% is male and 23.1% is female. In proportion to the total group of franchisees, more men returned the survey (table 10). Most (30.8%) of the franchisees belong to the category of 40 till 49 years old. The other franchisees are almost evenly distributed over the other categories above and below the middle one as can be seen in figure 6.
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More than 75% of the franchisees completed High school/ pre-university education/ intermediate vocational education or higher (figure 7). Only one of the franchisees completed just Elementary school or lower vocational education as shown in figure 8. More than 60% of the franchisees have previous experience as an entrepreneur. The average number of years of experience is 14 years and 11 months. More than 90% of the franchisees have previous experience as an entrepreneur. Only 2 out of the 26 franchisees have no previous management experience. The average number of years of experience is 11 years and 3 months.
Figure 7 Education levels franchisees
Looking at the distribution over the regions, the regions where the franchisees are active in is distributed the next way. Franchisees from region North returned the questionnaire the most compared to other regions. The franchisees from region North represent 30.8% of the sample, whereas other regions represent for 15.4% or 19.2%. Each region exists out of 7-14 franchisees (table 7). In proportion more men and more franchisees from region North returned the survey.
Total number % of total Number responding % of responding Region North 9 18.4 8 30.8 The Hague 14 28.6 5 19.2 Rotterdam 7 14.3 4 15.4 Amsterdam 11 22.4 5 19.2 South 8 16.3 4 15.4 Gender Men 31 63.3 20 76.9 Women 18 36.7 6 23.1
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In table 8 an overview is given of some basic details about the franchisees and their studio’s. More than 75% of the franchisees is daily attending into one or more of their studio’s. This can be more or less than half a day. Only 11.5% of the franchisees is occasionally or never in his or her studio. From the responding franchisees 18 franchisees, almost 70%, have never been a member of the FAC of Sunday’s. Three of the franchisees were a member in the past and five of the franchisees are currently member of the FAC. The franchisees have a high need for achievement (m=4.05), have a high internal locus of control (m=3.6), and a low need for autonomy (m=2.85). Furthermore, the franchisees are not satisfied with their unit performance (m=2.78). Number of years in industry Number of years Sunday's franchisee Number of studios Number of sun beds Mean 6,8 5,6 1,5 7,7
Table 8 Overview information sample
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Age franchisee
Mean
grade FAC Region
Mean grade FAC
Educational level Mean grade FAC 20-29 yrs 7,3 North 6,4 Elementary school 7,0 30-39 yrs 6,8 The Hague 6,6 Secondary school 7,0 40-49 yrs 5,8 Rotterdam 4,8 High school/
pre-university education
6,3
50-59 yrs 5,7 Amsterdam 5,8 Professional university/ University
5,4
60-70 yrs 6,5 South 7,3
Total 6,2 Total 6,2 Total 6,2
Table 9 Average grades FAC council per age group, region, and educational level. 4.2.2 Analyses per factor
In this paragraph step 2 of the analyses, the analyses of the individual factors, is being discussed. In table 10 the means, standard deviation, and minimum and maximum rating given to the factors are presented. These will be discussed per factor. The standard deviations are relatively small. So the differences of how the franchisee think about a factor are small.
Mgt Support Information Provision Commun ication Formal Plan Verification Activities Selection Member Quality Members Repres. Members Mean 3,02 2,73 3,34 2,98 3,25 3,46 3,42 3,28 Std. Deviation ,723 ,760 ,499 ,870 ,753 ,499 ,732 ,770 Minimum 1,43 1,67 2,06 1,00 1,80 2,25 2,00 1,67 Maximum 4,13 4,00 4,12 4,67 4,60 4,25 4,50 5,00 Table 10 Means, standard deviations, minimums and maximums per factor
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communication towards FAC members and all franchisees. Only since a lawyer is hired some information is given to the franchisees.” The franchisees are positive about the means of communication and the standard deviation (0.499) is one of the lowest, and the difference between minimum and maximum is small. So, the franchisees’ opinions about this factor match on this point. About the formal plan, the franchisees are rather neutral but there is a large difference between the most negative and most positive one. The franchisees are, about the verification of the activities of the FAC, on the positive side of the scale. In the survey franchisees commented that the minutes need to be accurate, at this moment the franchisees have the feeling that they are not. But even though this comment was made on the questionnaires, the franchisees graded the statements about if they think the correctness of the minutes of the region and FAC meetings is good with a 3.31 and 3.4. The communication of the made decisions towards the FAC by the franchisor and towards the franchisees was graded with an 2.85. The franchisees are the most positive about the selection of the members of the FAC. The minimum given to this factor is 2.25, so no franchisee is really negative. With an average of 3.8, the franchisees do not have any problem at all if FAC members are member longer than the two year period they officially should be a member. The franchisees are also positive about the quality of members of the FAC, but some franchisees commented that “Now there are some members who push through their opinion and the others should share their opinions as well. Some professionalism is missing in the total group of franchisees.”. The franchisees are on the positive side of the scale about the representativeness of the members of the FAC. So they think the members are a good reflection of the franchisees.
4.2.3 Relations between factors and satisfaction
In this paragraph the relation between the individual research factors and between the research factors and the satisfaction of franchisees with the FAC is being discussed (step 3 of the analyses).
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and the grade. It is surprising that this factor is related to all the grades, since the presence of a formal plan is not mentioned by one of the franchisees or in the survey as being important. The other factors are not significant related to the grade at all.
Grade FAC Management Support ,312 Information Provision ,318 Communication ,263 Formal Plan ,625** Verification Activities ,338 Selection Members ,235 Quality Members ,283 Representative Members ,151
**. Correlation is significant at the 0.01 level (2-tailed).
Table 11 Pearsson correlation between factors and grade FAC
For step 4 In table 12 the correlation analyses is given with the relation between the several factors. The flagged relations are positively significant related at the 0.01 level. It can be concluded that these factors are strongly related to each other. The strongest significant relation is between perceived management support and the information provision. Also information provision and communication are strongly related to each other. As third perceived management support and communication are strongly related and perceived management support and the control of the activities of the FAC are related. Considering the fact that perceived management support, information provision and communication are significantly related in each direction, one could conclude that the three factors might be united together into one overall factor. But on the other hand, much information will disappear when combining these factors.
44 1 2 3 4 5 6 7 8 1.Mgt Support 2.Info. Provision ,798** 3.Communication ,680** ,725** 4.Formal Plan ,642** ,543** ,354 5.Control Activities ,680** ,578** ,506** ,632** 6.Selection Members ,072 ,068 ,161 ,206 -,036 7.Quality Members -,425* -,338 -,234 -,003 -,411* ,312 8.Repres. Members ,621** ,560** ,524** ,622** ,551** ,264 -,216
**. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).
Table 12 Pearson correlation research factors
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Unstandardized Coefficients
Standardized Coefficients
B Std. Error Beta t Sig.
(Constant) -1,677 2,741 -,612 ,550 Management Support -,675 ,772 -,298 -,874 ,396 Information Provision ,392 ,584 ,186 ,671 ,512 Communication ,621 ,780 ,193 ,797 ,438 Formal Plan 1,345 ,492 ,731 2,736 ,015 Control Activities ,775 ,577 ,356 1,344 ,199 Selection Members ,420 ,566 ,128 ,742 ,469 Quality Members ,625 ,471 ,274 1,326 ,205 Representative Members -1,068 ,457 -,510 -2,335 ,034
a. Dependent Variable: Grade FAC
Table 13 Regression table factors
4.2.4 Factors important according to franchisees
In the survey the franchisees were asked to give their opinion in an open questions about the factors that are important for the satisfaction of franchisees with a FAC. Unfortunately not all of the franchisees answered the question correctly or answered the question at all. The factors that were mentioned are listed and the factors that are similar or related to each other are put together (step 4 of the analyses).
No. Factors mentioned (number)/ linked factors Total 1 Openness information (5)/ Transparency (3)/ Everyone same information (1) 9 2 Communication (5)/ Reach ability FAC (1)/ Intelligibility (1) 7 3 Good level members (4)/ Involvement members (2) 6 4 Stable rank-and-file (4)/ One line with region representative (1) 5 5 Participation (3)/ Decision-making authority (1) 4
6 Independency of members (2) 2
7 Good level of minutes (1)/ independent minutes secretary (1) 2
8 Taken seriously by franchisor (1) 1
9 Follow agreements made (1) 1
10 Depth (1) 1
11 Think tank (1) 1
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5. Discussion and recommendations
5.1 Discussion
This research investigated the factors that determine the satisfaction of franchisees with a FAC. In this paragraph the results of the research are being discussed. The literature, interviews, and the outcomes of the survey are combined together. First the separate research questions are discussed and the answers on the propositions, given in chapter 2, are given. Finally the tested research model is given.
5.1.1 Discussion of factors
There are multiple forms of employee and franchisee participation. These are once more shown in table 15. With this, the question about what forms of participation exist is answered.
Table 15 Forms of employee and franchisee participation
During a literature study the following factors were determined that seemed to have a positive influence on the satisfaction of franchisees with the FAC. The next factors are determined out of the literature about work councils (question 3) and translate info factors determining a satisfactory FAC (question 5):
- Perceived management support - Content of information provision - Means of communication
- Presence of a formal plan
- Verification of the activities of the FAC - Quality of selection of the FAC members - Quality of the FAC members
- Representativeness of the FAC members
Formal Informal
Direct (mostly individual)
Staff and management meetings
Interviews, dialog groups, internet communication and
suggestion boxes Indirect (mostly
collective)
Work council and Unions/ FAC and independent franchisee organizations
Management-representative meetings outside formal
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Table 16 provides an overview with the significant relations between the several factors and the satisfaction grade given to the FAC. After that all the factors are being discussed. In this discussion answers to the questions if the research model need to be adjusted, if the franchisees were satisfied with the factors, and what factors they thought were important.
Factors Satisfaction FAC
Perceived management support Content of information provision Means of communication
Presence of a formal plan +
Verification of the activities of the FAC Quality of selection of the FAC members Quality of the FAC members
Representativeness of the FAC members -
Table 16 Overview factors significantly related to grades given for satisfaction
The most satisfied franchisees with the FAC are the men, between the 20-29 years old, with a lower level of education completed, and no previous experience as an entrepreneur or manager. Next to these personal characteristics, the satisfaction of the franchisees with their unit performances has a positive influence on the satisfaction of the franchisees with the FAC.
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In the literature study it came forward that the information provision from the franchisor towards the FAC, and from the FAC towards the franchisees has to be of a satisfying quality. The franchisor has to provide information in an early stage and aim not only at short term results but especially a good (strategic) consultative relationship and hold discussions on matters of strategy. The franchisees interviewed all said that Sunday’s does not provide much information and the information provided is often not detailed and open in their opinion. In the survey the franchisees tend to be on the unsatisfying side, looking at the information provision. The proposition set for this factor was: If the information provision of the franchisor is of good, franchisees will be more satisfied with their FAC. In the quantitative analyses it was shown that information provision is not significantly related to franchisees satisfaction with the FAC.
The means of communication from the franchisor towards the FAC and from the FAC towards the franchisees has to be of a satisfying level. Communication can be done in meetings, by telephone, written exchange of information and attending each other's meetings to keep each other informed of insights and ideas, and to realise timely involvement in strategic developments (Goodijk 1998, Goodijk 2000). This communication can be in real time or with the use of modern communication resources. Looking at the answers given to questions related to communication, the franchisees at Sunday’s are just satisfied with the means of communication. It was expected that if the means of communication between the franchisor and the FAC and the FAC and the franchisees is satisfying, franchisees will be more satisfied with their FAC. In the quantitative analyses it was shown that communication is not significantly related to franchisees satisfaction with the FAC.
