How Can Regulation be Enhanced? New Perspectives on the Causes and Continuation of Franchising Conflict in Australia

Abstract

Although federal Australian franchising sector regulation promotes franchise system disclosure and provides for mandatory conflict mediation, there is some concern that inequities exist within the conflict management process. As a result regulators are reviewing existing regulation and investigating alternative dispute resolution options in an attempt to proactively manage franchising conflict. Central to this process is identifying the sources of conflict in the franchising relationship. Conflict refers to the existence of deep underlying differences between involved parties that result in responses to potential or actual obstructions that impede one or more parties from realising their goals. This inductive research extends the conflict literature in dyadic exchange relationships through investigating antecedent influences upon franchising conflict from the franchisor and franchisee perspectives. A total of 24 interviews was conducted with lawyers, mediators, brokers, franchisors, franchisee advocates, franchise consultants, franchising academics, franchisor industry representatives and franchising media representatives. The key findings suggest that a lack of due diligence is associated with the formation of unrealistic expectations which increases the potential for future relational conflict. Although franchising experience impacts upon operational approaches and conflict, the role played by third parties and market conditions both appear to exacerbate dissatisfaction in most franchise systems. The concept maps and preliminary conceptual models presented in this paper will be tested in a large quantitative survey of key franchising stakeholders in the near future.