Factors influencing governance choice and human resource management within services franchising networks

This research provides a better understanding of the factors driving the choice of governance structures and human resource management (HRM) practices within services franchising arrangements. A qualitative multiple case study approach was favoured so as to obtain a clearer picture of the main issues and parameters. Nineteen franchisors using predominantly pure franchising, predominantly pure company-owned, plural, and predominantly multiple unit growth strategies were interviewed. Major contrasts have been identified, suggesting that system size, industry maturity and the nature of market demand impacts upon the choice of system governance structure. Generally, less mature and smaller networks rely upon predominantly single unit franchising strategies and less sophisticated HRM practices to foster local market innovation, build brand value and support rapid unit growth, while predominantly company owned strategies are favoured in environments of low competition and minimal demand uncertainty. In comparison, more mature systems use hybridised franchising forms and sophisticated HRM strategies to accommodate the competing demands of local market innovation, systemwide adaptation and system uniformity.