Your Franchisee’s Performance: the Importance of Personal and Contextual Factors

The August 20, 2018, edition of the scientific publication Journal of Business and Psychology presented the findings of a major academic study conducted recently in Australia in which 1,570 franchisees in 35 franchise networks were surveyed.

Although this major study was carried out on the other side of the globe, its findings are interesting and relevant for any franchisor that is concerned about its franchisees' performance.

The objective of this broad study was to identify the personal and contextual factors that could contribute to better performance by a franchisee, in two respects:

1. the franchisee's financial performance; and
2. the franchisee's franchise citizenship (constructive participation in the network and, more particularly, level of participation in network activities, compliance with the franchisor's norms and standards, and reliability of reporting and information to the franchisor).

First, the authors focused their research on the impact of the following three personality traits of franchisees on their performance within the franchise network:

1. proactivity; 
2. optimism; and
3. affective commitment to the network.

The findings of the authors of the study regarding the impact of those three attributes on franchisee performance can be summarized as follows:

• Franchisees' proactivity has a positive impact on their financial performance, but not necessarily on their franchise citizenship;
• Franchisees' level of optimism has a positive impact on their financial performance, but not necessarily on their franchise citizenship;
• Conversely, franchisee's affective commitment to their network has a positive impact on their franchise citizenship, but not necessarily on their financial performance.

Second, the authors also sought to understand the influence of the following two contextual factors on franchisee performance:

1. (a)  family support; and
2. organizational support as perceived by franchisees.

The researchers' findings regarding the impact of these two factors on franchisee performance were:

• Family support has a positive impact on both franchisee financial performance and franchisees' franchise citizenship;
• Franchisees' perception that they receive genuine organizational support from their franchisor also has a positive impact on both their financial performance and their franchise citizenship; and
• Franchisees' perception that there is a lack of support from their franchisor can nullify the positive impact of proactivity on financial performance.

The authors summarized the general conclusion of the study as follows:

''Our findings indicate that franchisee optimism, proactivity, family support, and perceived organizational support were all positively associated with financial performance. Moreover, franchisee affective commitment, family support, and perceived organizational support were positively associated with franchise citizenship [constructive participation in the network].    

We further found interactive effects demonstrating that optimism can enhance franchise[e] citizenship, but only when family support is also high. In addition, low levels of aggregated organizational support undermined the relationship of franchisee proactivity with financial performance.    

These findings emphasize the need for franchisors to ensure that franchisees feel supported in their roles, and highlight the importance of a climate of support within the franchise network.    

For franchisees who perceive low organizational support (or in franchise networks where there is a less supportive context), a lack of support can result in lower performance (directly) and also "turn off" the positive benefits of proactivity for financial performance (interactively).    

Overall, our research provides a valuable application of COR [conservation of resources] theory to a novel work context, as well as useful insights into franchisee performance, which can be acted upon by franchisors in the selection, development, and support of franchisees to maximize business performance to the benefit of all.''    

Ultimately, the key word that emerges from the study is "support": family support, support by the franchisor, and a climate of support within the network. This is therefore an essential aspect of the franchisor's role: in addition to franchisors themselves having to provide franchisees with ongoing support (although adapted to each franchisee's situation), they should also encourage family support and foster a climate of support and mutual assistance within their network, among all their members and collaborators (franchisees, franchisor's personnel, suppliers, backers, lenders, etc.).

While the study is somewhat theoretical, the findings reported by these researchers can help franchisors better understand some of the factors that have an impact on their franchisees' performance. The understanding they gain will then help them improve their tools and processes for selecting franchisees, communicating with their franchisees, and supporting franchisees.

Fasken has all the expertise and resources that are needed to provide you with good advice and support you in all aspects of starting up, managing and expanding your network, everywhere in the world.