Exits and expectations: why disappointed franchisees leave

Abstract

Numerous studies of franchisee failure have been conducted with mixed results reported due to methodological differences and the definition of failure used. There has been an emphasis in the literature on estimating and comparing the failure rates for these organisations. This paper acknowledges that franchisee failure is a concern but concentrates on the causes of failure. To do so, a definition of 'negative franchisee exits' is developed to overcome deficiencies in previous definitions of failure. The research is carried out in two stages. Firstly, franchisors and their ex-franchisees are interviewed. Then, the insights gained from the qualitative research are used to develop a model for the second stage of the research. Findings from a survey of franchisors indicate that franchise system size, level of franchisee investment and degree of conflict are related to the incidence of negative franchisee exits.