The Effect of Information and communications technology (ICT) on franchisee to franchisor relationships.

Abstract

Throughout the franchise industry, franchisors are increasingly introducing information and communications (ICT) technology into their franchise networks in attempts to save costs and increase efficiency, and are subsequently replacing their franchise support managers and preexisting, socially-rooted franchisor-to-franchisee relationships with computers. Because large and complex ICT franchise support and reporting systems are costly, it is vital for franchisors to be able call upon sound empirical research, of which there is currently a paucity, to assist them in judging whether such expensive technology-driven ICT strategies are likely to be worth the cost and effort, and indeed if they are, how to subsequently prepare for and handle any resulting changes in their relationships with their networks of franchisees. Even though there is rapidly escalating use of ICT systems in franchising worldwide, very little has been written about the way that such technological deployment within the industry has modified or affected the franchisee to franchisor relationship and network profitability. Therefore, this work seeks to make a contribution in this area. Multiple sources of data were collected (interview, observation and Intranet materials). Semistructured interviews were held with the CEO’s of two United Kingdom franchise systems, and with twenty-eight franchisees from one of these systems. The interviews were tape-recorded. Intranet materials made available by the case companies included franchise agreements, operations manuals, various Intranet resource files and other online management information. Visits to the Head Offices of both franchise systems provided the opportunity for direct observations and an understanding of the operating norms of the businesses. The initial interviews were transcribed and coded using Grounded Theory procedures, and then multiple follow-up interviews with fifteen of the franchisees were completed over a twelve-month period enabling the developing process of focused coding, conceptual categories and theoretical sampling to be carried out, which resulted in a Theory of Franchise Remote Control being revealed. The content of the resultant theory was then viewed through the context of extant franchising, relationship marketing and B2B literature. The results of this empirical grounded theory study, unusually carried out from the franchisee perspective, shows that franchisors must crucially recognise that virtual support delivered through an ICT system via online methods such as electronic updates, knowledge bases and email, plus a change in strategy to one of offering reactive rather than pro-active assistance, does not automatically result in successful technological implementation, however expensive or competent the ICT system is. Through the development of a complex Theory of Franchise Remote Control, this thesis reveals that for every time and cost-saving technological advance deployed through the ICT for their own benefit and ease, franchisors must advance a balancing social benefit for their franchisees. Equally importantly, franchisors embarking upon ICT introduction must understand that franchisees will accept newness and change only if they continue to feel valued. Valuing cannot be demonstrated through electronic means alone. It must be operationalised though the mechanisms of social bonding and the recognition of success.