To be or not to be franchised? A knowledge-based perspective

This paper investigates the rationale for choosing franchising rather than independent activity, arguing that this choice may be motivated by knowledge and competence considerations. We consider the franchise chain as a specific learning organizational form and explore whether this structure handles knowledge and builds competences according to an idiosyncratic pattern. Concretely, we empirically identify differences in the architecture of competences of franchised vs independent shops in the car maintenance industry in France, and analyse some causes for those differences. Thanks to in depth interviews coupled with lexical and quantitative analyses we find that franchised shops do master specific competences. However, the distinctive competences held by franchisees do not necessarily reflect franchisors’ knowledge, and are not exclusively the consequences of a shared identity in the franchise chain. We conclude that the development of franchise cannot be explained by competence-related arguments only, knowledge and competences being managed in distinctive ways within different franchising networks.