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Analysis of efficiency and profitability of franchise services

Author

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  • Constantino J. Garcia Martin
  • Amparo Medal-Bartual
  • Marta Peris-Ortiz

Abstract

The present study analyses the relative efficiency of franchise services and characterises the best companies, confirming the relationship between efficiency and profit. These companies are from 'the trade and other services sector', the main group of service-providing companies in the Spanish economy. The methodology calls for first comparing the relative efficiency of franchisers and ownership enterprises. Second, the focus turns to the most efficient franchise services, using a super-efficiency model to rank them. The paper then goes on to cover the analysis of the main characteristics of the best franchise enterprises, the number of own establishments in a franchise business and the profitability of the company. This paper presents arguments as to why companies from the trade and other services sector are included. The main conclusion is that, whilst the number of establishments is irrelevant in achieving greater efficiency, many of the most efficient enterprises have high returns.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:servic:v:34:y:2014:i:9-10:p:796-810
    DOI: 10.1080/02642069.2014.905921
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    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. 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.

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