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Franchise ownership types and noneconomic performance among quick service restaurants: do family operated franchises receive fewer health code violations?

Author

Listed:
  • Erik Markin

    (Mississippi State University)

  • Chelsea Sherlock

    (Mississippi State University)

  • R. Gabrielle Swab

    (Parker College of Business, Georgia Southern University)

  • Benjamin D. McLarty

    (Rowan University)

Abstract

Using an agency theory perspective combined with arguments related to the importance of socioemotional wealth (SEW), we evaluate the distinctions among family-, lone-founder-, and corporate-owned and operated restaurants regarding their impact on relevant noneconomic goals in the franchising context (i.e., health code violations). Because of agency issues and family-centric long-term motivations (e.g., desires to enrich members of the family and maintain family ownership across generations), we predict family franchises will place a greater emphasis on noneconomic outcomes and should outperform both lone-founder and corporate restaurants (i.e., receive less health-code violations). Relatedly, we also predict lone-founder franchises will receive fewer violations than corporate outlets due to their enhanced identification with the franchise. We test our hypotheses with a sample of three large fast-food chains in the Southeastern United States. Surprisingly, our results indicate that family-owned restaurants perform worse on noneconomic outcomes than both lone-founder- and corporate-owned restaurants. We discuss the implications of these findings to offer contributions to family business research and franchise practitioners alike.

Suggested Citation

  • Erik Markin & Chelsea Sherlock & R. Gabrielle Swab & Benjamin D. McLarty, 2024. "Franchise ownership types and noneconomic performance among quick service restaurants: do family operated franchises receive fewer health code violations?," Small Business Economics, Springer, vol. 63(2), pages 851-869, August.
    • Handle: RePEc:kap:sbusec:v:63:y:2024:i:2:d:10.1007_s11187-024-00882-7
    DOI: 10.1007/s11187-024-00882-7
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    More about this item

    Keywords

    Agency theory; Family firms; Family involvement; Franchising; Noneconomic goals;
    All these keywords.

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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