An empirical examination of the reasons governing multiple unit franchise adoption in Australia

Abstract

This study examines reasons why multiple unit franchising arrangements are adopted from a franchisor perspective. Based on the resource constraints and agency literatures a set of seven hypothesis explaining the choice of multiple unit franchising from a franchisor's perspective are derived and subjected to empirical assessment. The analysis is carried out using a sample of 114 Australian franchisors. Significant differences between prior explanations of the motivational incentives governing multiple unit adoption and practice within the Australian franchising sector were found. Results indicate that franchisors appear to approach the selection, recruitment and management of multiple unit franchisees in an ad hoc fashion that may have a deleterious effect upon the ongoing management of the franchising relationship. Implications for managerial action and future research direction are discussed.