IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i6p3391-d520049.html
   My bibliography  Save this article

Effects of Marketing Decisions on Brand Equity and Franchise Performance

Author

Listed:
  • Eunkyung Lee

    (International Business School Suzhou, Xi’an Jiaotong-Liverpool University, Suzhou 215123, China)

  • Ji-Hern Kim

    (Department of Business Administration, School of Business and Economics, Sejong University, Seoul 05006, Korea)

  • Chang Seop Rhee

    (Department of Business Administration, School of Business and Economics, Sejong University, Seoul 05006, Korea)

Abstract

The purpose of this study is to provide a way of pursuing a balanced profitability between franchisors and franchisees leading to the sustainability in franchising. Based on a belief that the formation of brand-centric relationship is vital for the success of franchising system, we constructed a model that examines the relationships between marketing decisions, brand equity, and the financial performances of franchisors and franchisees. We used actual data of the Korean franchise chains, including measures of channel intensity and advertising and promotional activities as franchise marketing decisions as well as the profitability of franchisors and franchisees for the analysis. The results of analysis show that while advertising and promotion expenditure has a positive impact on the performances of both franchisors and franchisees, the number of stores does not influence them in the same way. This indicates that their interests may conflict. This study suggests that marketing decisions can be utilized as a means of achieving balanced profitability that would benefit the sustainability in franchising between franchisors and franchisees.

Suggested Citation

  • Eunkyung Lee & Ji-Hern Kim & Chang Seop Rhee, 2021. "Effects of Marketing Decisions on Brand Equity and Franchise Performance," Sustainability, MDPI, vol. 13(6), pages 1-15, March.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:6:p:3391-:d:520049
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/6/3391/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/6/3391/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Esther Calderon-Monge & Ivan Pastor-Sanz & Pilar Huerta-Zavala, 2017. "Economic Sustainability in Franchising: A Model to Predict Franchisor Success or Failure," Sustainability, MDPI, vol. 9(8), pages 1-16, August.
    2. Doo-Young Park & Kanghwa Choi & Dae-Han Kang, 2020. "Measuring the Meta Efficiency and Its Determinants on Efficiency in the Korean Coffee Shop Franchise," Sustainability, MDPI, vol. 12(6), pages 1-20, March.
    3. Dant, Rajiv P. & Grünhagen, Marko & Windsperger, Josef, 2011. "Franchising Research Frontiers for the Twenty-First Century," Journal of Retailing, Elsevier, vol. 87(3), pages 253-268.
    4. Sujin Bae & Timothy Hyungsoo Jung & Natasha Moorhouse & Minjeong Suh & Ohbyung Kwon, 2020. "The Influence of Mixed Reality on Satisfaction and Brand Loyalty in Cultural Heritage Attractions: A Brand Equity Perspective," Sustainability, MDPI, vol. 12(7), pages 1-22, April.
    5. Kevin Lane Keller, 2016. "Reflections on customer-based brand equity: perspectives, progress, and priorities," AMS Review, Springer;Academy of Marketing Science, vol. 6(1), pages 1-16, June.
    6. Jae-Bin Cha & Mi-Na Jo, 2019. "The Effect of the Corporate Social Responsibility of Franchise Coffee Shops on Corporate Image and Behavioral Intention," Sustainability, MDPI, vol. 11(23), pages 1-16, December.
    7. Constantino J. Garcia Martin & Amparo Medal-Bartual & Marta Peris-Ortiz, 2014. "Analysis of efficiency and profitability of franchise services," The Service Industries Journal, Taylor & Francis Journals, vol. 34(9-10), pages 796-810, July.
    8. Gillis, William E. & Combs, James G., 2009. "Franchisor strategy and firm performance: Making the most of strategic resource investments," Business Horizons, Elsevier, vol. 52(6), pages 553-561, November.
    9. Crass, Dirk & Czarnitzki, Dirk & Toole, Andrew A., 2019. "The Dynamic Relationship Between Investments in Brand Equity and Firm Profitability: Evidence Using Trademark Registrations," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 26(1), pages 157-176.
    10. Rozenn Perrigot & Guy Basset, 2018. "Resale pricing in franchised stores: A franchisor perspective," Post-Print halshs-01767449, HAL.
    11. Shaikh, Ateeque, 2016. "Conceptualizing fairness in franchisor–franchisee relationship: Dimensions, definitions and preliminary construction of scale," Journal of Retailing and Consumer Services, Elsevier, vol. 28(C), pages 28-35.
    12. Jérôme Barthélemy, 2008. "Opportunism, knowledge, and the performance of franchise chains," Strategic Management Journal, Wiley Blackwell, vol. 29(13), pages 1451-1463, December.
    13. Buil, Isabel & de Chernatony, Leslie & Martínez, Eva, 2013. "Examining the role of advertising and sales promotions in brand equity creation," Journal of Business Research, Elsevier, vol. 66(1), pages 115-122.
    14. Fischer, Marc & Himme, Alexander, 2017. "The financial brand value chain: How brand investments contribute to the financial health of firms," International Journal of Research in Marketing, Elsevier, vol. 34(1), pages 137-153.
    15. Wu, Chih-Wen, 2015. "Antecedents of franchise strategy and performance," Journal of Business Research, Elsevier, vol. 68(7), pages 1581-1588.
    16. Rozenn Perrigot & Olivier Herrbach, 2012. "The plural form from the inside A study of franchisee perception of company-owned outlets within their network," Post-Print halshs-01102636, HAL.
    17. Badrinarayanan, Vishag & Suh, Taewon & Kim, Kyung-Min, 2016. "Brand resonance in franchising relationships: A franchisee-based perspective," Journal of Business Research, Elsevier, vol. 69(10), pages 3943-3950.
    18. Swoboda, Bernhard & Berg, Bettina & Schramm-Klein, Hanna & Foscht, Thomas, 2013. "The importance of retail brand equity and store accessibility for store loyalty in local competition," Journal of Retailing and Consumer Services, Elsevier, vol. 20(3), pages 251-262.
    19. Nicholas Argyres & Janet Bercovitz, 2015. "Franchisee Associations as Sources of Bargaining Power? Some Evidence," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(4), pages 811-832, October.
    20. Anselmsson, Johan & Bondesson, Niklas, 2015. "Brand value chain in practise; the relationship between mindset and market performance metrics: A study of the Swedish market for FMCG," Journal of Retailing and Consumer Services, Elsevier, vol. 25(C), pages 58-70.
    21. Perrigot, Rozenn & Basset, Guy, 2018. "Resale pricing in franchised stores: A franchisor perspective," Journal of Retailing and Consumer Services, Elsevier, vol. 43(C), pages 209-217.
    22. J. Augusto Felício & Margarida Duarte & Vítor Caldeirinha & Ricardo Rodrigues, 2014. "Franchisee-based brand equity and performance," The Service Industries Journal, Taylor & Francis Journals, vol. 34(9-10), pages 757-771, July.
    23. Nyadzayo, Munyaradzi W. & Matanda, Margaret J. & Rajaguru, Rajesh, 2018. "The determinants of franchise brand loyalty in B2B markets: An emerging market perspective," Journal of Business Research, Elsevier, vol. 86(C), pages 435-445.
    24. Jasper Grashuis, 2019. "The impact of brand equity on the financial performance of marketing cooperatives," Agribusiness, John Wiley & Sons, Ltd., vol. 35(2), pages 234-248, April.
    25. Olav Sorenson & Jesper B. Sørensen, 2001. "Finding the right mix: franchising, organizational learning, and chain performance," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 713-724, June.
    26. Kidwell, Roland E. & Nygaard, Arne & Silkoset, Ragnhild, 2007. "Antecedents and effects of free riding in the franchisor-franchisee relationship," Journal of Business Venturing, Elsevier, vol. 22(4), pages 522-544, July.
    27. Ijaz Hussain & Shaohong Mu & Muhammad Mohiuddin & Rizwan Qaiser Danish & Shrafat Ali Sair, 2020. "Effects of Sustainable Brand Equity and Marketing Innovation on Market Performance in Hospitality Industry: Mediating Effects of Sustainable Competitive Advantage," Sustainability, MDPI, vol. 12(7), pages 1-19, April.
    28. Wang, Jeff Jianfeng & Grünhagen, Marko & Ji, Li (Jenny) & Zheng, Xu (Vivian), 2020. "Conflict Aftermath: Dispute Resolution and Financial Performance in Franchising," Journal of Retailing, Elsevier, vol. 96(4), pages 548-562.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nurul Ashykin Abd Aziz & Mohamad Rohieszan Ramdan & Nik Syuhailah Nik Hussin & Zuraimi Abdul Aziz & Juliana Osman & Hasif Rafidee Hasbollah, 2021. "The Determinants of Global Expansion: A Study on Food and Beverage Franchisors in Malaysia," Sustainability, MDPI, vol. 13(18), pages 1-16, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Perrigot, Rozenn & López-Fernández, Begoña & Basset, Guy, 2020. "“Conflict-performance assumption†or “performance-conflict assumption†: Insights from franchising," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    2. Gillis, William E. & Combs, James G. & Yin, Xiaoli, 2020. "Franchise management capabilities and franchisor performance under alternative franchise ownership strategies," Journal of Business Venturing, Elsevier, vol. 35(1).
    3. Perrigot, Rozenn & López-Fernández, Begoña & Basset, Guy, 2021. "Conflict management capabilities in franchising," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    4. Rozenn Perrigot & Begoña López-Fernández & Guy Basset & Olivier Herrbach, 2020. "Resale pricing as part of franchisor know-how," Post-Print halshs-02566446, HAL.
    5. Patcharapol Suttidharm & Adisorn Leelasantitham, 2024. "Conceptual Models of Franchisee Behaviors in the Dietary Supplements and Cosmetics to Imply the Business Investments," Sustainability, MDPI, vol. 16(10), pages 1-33, May.
    6. Evelien P. M. Croonen & Maryse J. Brand & Eelko K. R. E. Huizingh, 2016. "To be entrepreneurial, or not to be entrepreneurial? Explaining differences in franchisee entrepreneurial behavior within a franchise system," International Entrepreneurship and Management Journal, Springer, vol. 12(2), pages 531-553, June.
    7. Roland E. Kidwell & Arne Nygaard, 2011. "A Strategic Deviance Perspective on the Franchise Form of Organizing," Entrepreneurship Theory and Practice, , vol. 35(3), pages 467-482, May.
    8. Utgård, Jakob & Nygaard, Arne & Dahlstrom, Robert, 2015. "Franchising, local market characteristics and alcohol sales to minors," Journal of Business Research, Elsevier, vol. 68(10), pages 2117-2124.
    9. Fu-Sheng Tsai & Chin-Chiung Kuo & Julia L. Lin, 2020. "Knowledge Heterogenization of the Franchising Literature Applying Transaction Cost Economics," Economies, MDPI, vol. 8(4), pages 1-27, November.
    10. Boulay, Jacques & Caemmerer, Barbara & Evanschitzky, Heiner & Duniach, Krista, 2020. "Multi-unit franchising from franchisor and franchisee perspectives: Antecedents, performance outcomes, and the optimal mini-chain size," Journal of Business Research, Elsevier, vol. 113(C), pages 49-58.
    11. Hsu, Liwu & Kaufmann, Patrick & Srinivasan, Shuba, 2017. "How Do Franchise Ownership Structure and Strategic Investment Emphasis Influence Stock Returns and Risks?," Journal of Retailing, Elsevier, vol. 93(3), pages 350-368.
    12. Doo-Young Park & Kanghwa Choi & Dae-Han Kang, 2020. "Measuring the Meta Efficiency and Its Determinants on Efficiency in the Korean Coffee Shop Franchise," Sustainability, MDPI, vol. 12(6), pages 1-20, March.
    13. Dubey, Vivek K. & Matthes, Joseph M. & Saini, Amit, 2023. "Impact of socioeconomic values collaboration on performance in franchising," Journal of Business Research, Elsevier, vol. 162(C).
    14. Maryse J. Brand & Evelien P. M. Croonen & Roger T. A. J. Leenders, 2018. "Entrepreneurial networking: a blessing or a curse? Differential effects for low, medium and high performing franchisees," Small Business Economics, Springer, vol. 50(4), pages 783-805, April.
    15. Begoña López-Fernández & Susana López-Bayón, 2018. "Antecedents of early terminations in franchising: franchisor versus franchisee cancelations," Small Business Economics, Springer, vol. 50(4), pages 677-695, April.
    16. Muriel Fadairo & Cintya Lanchimba & Josef Windsperger, 2015. "Network Form and Performance. The Case of Multi-Unit Franchising," Working Papers halshs-01128075, HAL.
    17. Meiseberg, Brinja & Perrigot, Rozenn, 2020. "Pricing-based practices, conflicts and performance in franchising," European Management Journal, Elsevier, vol. 38(6), pages 939-955.
    18. Brookes, Maureen & Roper, Angela, 2012. "Realising plural-form benefits in international hotel chains," Tourism Management, Elsevier, vol. 33(3), pages 580-591.
    19. Anant Deshpande & David Tsai, 2021. "Managing a Mission-driven Franchise Organization: An Empirical Investigation of Organizational Practice and Individual Outcomes," Global Business Review, International Management Institute, vol. 22(2), pages 311-347, April.
    20. Itai Ater & Oren Rigbi, 2015. "Price control and advertising in franchising chains," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 148-158, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:6:p:3391-:d:520049. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.