The Effective Delivery of Franchisor Services: A Comparison of U.S. and German Support Practices for Franchisees

Abstract

Conventional wisdom in the franchise industry suggests that more services offered by franchisors should lead to fewer complaints from franchisees, and that franchisees ought to be better off with additional support provided. We set out to differentiate those services that are truly effective and that are perceived as beneficial by franchisees, from those that may have little effect or may even be perceived as counterproductive. Our survey targeted franchisors in the U.S. and in Germany in an attempt to compare the most mature franchise market globally to one that is relatively young. We find that system disruption is clearly dependent on the maturity of the market, as not much differentiation of services is provided in the very mature U.S. market, but a good amount of differentiation exists in the relatively younger German market. Also, the size of the system that offers the services matters, as bigger systems typically provide more services. Finally, different types of services are identified as having varying levels of effectiveness in the less mature franchise market of Germany.