Drivers of Performance of Franchisees: A Multi-level Analysis

Abstract:The aim of this study is to examine the drivers of performance of franchisee organizations. Adopting agency theory, we hypothesize that age, size and obligatory assortment decided by central franchisors, distribution of power from franchisors to franchisees and frequency of franchisor’s visits to franchisee are positively associated with the performance of franchisees. The survey data of 186 franchisees in four European countries are used to test the proposed hypotheses. Principal component analysis and a hierarchical linear model are applied in this study. Empirical results reveal that whether the proposed hypotheses are statistically supported depend correspondingly on how franchisees’ performance is measured. The paper provides some implications for franchisee literature.