Franchise network restructuring: Pressures, constraints and mechanisms

Cox, J. and Mason, C. (2009) Franchise network restructuring: Pressures, constraints and mechanisms. Entrepreneurship and Regional Development, 21(5-6), pp. 503-527. (doi: 10.1080/08985620802365178)

Abstract

Franchised businesses operate on the basis of granting individual franchisees trading rights to serve territories or market areas on either an exclusive or a non-exclusive basis. The design of these territories is generally undertaken during the roll-out phase of the franchise. However, these territories and market areas may become sub-optimal over time, necessitating restructuring. However, if the franchisor has granted exclusive rights to a territory then this is likely to involve a breach in the franchise contract. In cases where existing franchisees do not have exclusive territories they may nevertheless make a legal challenge to the creation of additional franchises on the grounds of encroachment. This paper – which is based on a study of 40 franchisors in the UK – examines how franchisors go about network restructuring in constrained and non-constrained situations. Franchisors typically did not act on their legal rights, echoing findings of earlier franchising studies which reveal a divergence between contractual rights and operational behaviour. This focus on network restructuring also provides new perspectives on the reasons for ownership reversion and the growth of multi-unit franchisees.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Mason, Professor Colin
• Authors: Cox, J., and Mason, C.
• College/School: College of Social Sciences > Adam Smith Business School > Management
• Journal Name: Entrepreneurship and Regional Development
• ISSN: 0898-5626
• ISSN (Online): 1464-5114
• Published Online: 02 December 2010