Investigating Industrial Relations in Franchise Firms

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Title Investigating Industrial Relations in Franchise Firms
Author Kellner, Ashlea Kate; Wilkinson, Adrian John; Townsend, Keith John
Publication Title 7th Asian Congress of the International Labour and Employment Relations Association (ilera). Industrial Democracy, Partnership, and Decent Work in Responding to Global Financial Crisis
Editor Dr. Sutanto Suwarno
Year Published 2010
Place of publication Indonesia
Publisher UNI Global Union
Abstract In line with Track 1, this paper will explore industrial relations in a globalising Asia. A key driver of globalisation is the growing domination of franchising as a form of international retailing. Franchising has seen huge success over the last few decades, approaching saturation point in many developed nations such as the USA and Australia, and spreading at an increasing rate in developing nations including parts of Asia and South America (Elango & Fried, 1997; Inma, 2005). The economic impact of franchising is growing internationally and this is reflected by scholarly research in fields such as marketing, law and finance. However, investigation of the management of employment in franchises has garnered far less academic interest. In response, this study has been conducted to explore the factors that influence franchise organisations in their approach to managing people. The term 'franchise' refers to a distinct organisational form based on the business relationship between two key parties: the 'franchisor' who is the developer of the franchised product or service, and the 'franchisee' who purchases the rights to trade under the franchise name and operate a business unit (Elango & Fried, 1997; Shane & Hoy, 1996). The most common 'business format' form of franchising provides franchisees with a full system for business operation, often including support in arranging finance, site selection, delivering training and opening the store (Felstead, 1993). This system is devised to control, monitor and support franchisees, ensuring a consistent product or service in every unit (Baucus, Baucus, & Human, 1993). It is this degree of operational control in business format franchises that makes this type of franchise appropriate to examine the extent to which support is also provided in the management of people. This paper presents the franchise concept, locating it in the limited body of research that considers employment relations (ER) in these organisations. In this paper, the term employment relations is used broadly to describe all of the activities associated with the management of people, which are often considered independently as industrial relations (IR) and human resources (HR). The paper asks two research questions; do franchisors offer support to franchisees in managing employment relations, and what factors influence this support? In order to answer these questions a purposeful sampling method was used to determine a mix of six firms in industry sub-sectors that would not ordinarily be comparable. Interviews were conducted with fourteen corporate office representatives deemed appropriate or knowledgeable of the firm's ER approach. Data collected through interviews, observation and documentary evidence was later transcribed and analysed using a qualitative analysis software package. The findings of the study showed that the six case organisations varied significantly in the level and focus of support provided to franchisees. For instance, while one firm did not have an ER department or offer any support beyond monitoring employee turnover, another firm staffed an ER department of ten people and provided services including employee inductions, recruitment and a phone support-line for franchisees. Furthermore, while the focus of support in some firms was purely on typical HR activities such as training and recruitment, other firms also provided support in complex IR matters. The delineation between the firms appeared to be related to their perception of the risk of liability and brand damage. Some firms explained that offering ER support carries the risk of liability for proving incorrect information to franchisees, therefore they chose to offer little support. Meanwhile, other firms acknowledged that by not providing support their franchisees may commit misconduct (such as under-paying employees or hiring underage workers) which could damage the brand. In order to protect the brand, these firms managed the risk
Peer Reviewed Yes
Published Yes
Publisher URI
Copyright Statement Copyright remains with the authors 2010. The attached file is reproduced here in accordance with the copyright policy of the publisher. For information about this conference please refer to the conference's website or contact the authors.
Conference name 7th Asian Congress of the International Industrial Relations Association (IIRA)
Location Bali, Indonesia
Date From 2010-09-20
Date To 2010-09-23
Date Accessioned 2011-02-10
Language en_AU
Research Centre Centre for Work, Organisation and Wellbeing
Faculty Griffith Business School
Subject Industrial Relations
Publication Type Conference Publications (Full Written Paper - Refereed)
Publication Type Code e1

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