Academic research in franchising

Horace Rumpole clearly expressed his opinion of academic legal research when he “applied a torn-off page of the Criminal Law Review to the electric fire and lit a small cigar” (John Mortimer, Rumpole a la Carte). Rumpole can possibly be excused his desecration of the Criminal Law Review: He “always found knowing the law a bit of a handicap for a barrister”. Rumpole’s attitude suggests that Dame Leonie Kramer, a distinguished Australian academic, was not entirely correct when she opined that “Australia may be the only country in the world in which the word ‘academic’ is regularly used as a term of abuse”. Fortunately, and for the benefit of both practising and academic lawyers, Rumpole’s view is not universally held. Legal academics make a substantial and acknowledged contribution to synthesising, explaining and developing the law.

In the entrepreneurial and commercial world of franchising there are no doubt even more franchising Rumpoles but, one hopes, not too many. Academic research into structural, behavioural, operational, legal and sector performance issues is a valuable underlying resource that contributes to a better understanding of franchising success and failure. Academic research is a valuable resource for the wider franchising community. Business research, which every franchise system will engage in at various developmental stages, is focused on particular issues and challenges. Academic research seeks to make sense of wider issues. It asks, and seeks to answer, different kinds of questions relating to underlying structural, behavioural, relational, operational, managerial and legal issues as well as examining the performance of franchising in comparison to other expansion strategies. A strong franchising sector is strengthened by a strong research base.

This column is prompted by my recent attendance at the 19^th Annual Conference of the International Society of Franchising – a multidisciplinary, multinational organisation comprising university academics who are interested in franchising and whose refereed conference proceedings now comprise over 400 papers addressing various aspects of franchising.

Unlike the International Franchise Association (the US equivalent of the Franchise Council of Australia) whose support and sponsorship was crucial in its development, the ISOF is truly international. At the 2005 conference held in London in May academics from 13 countries presented papers and over half of the attendees were from outside the US.

The ISOF is truly multidisciplinary and invites papers from all disciplines on any topic related to franchising. The annual call for papers notes the relevant disciplines – accounting, communications, economics, entrepreneurship, finance, hospitality management, international business, law, logistics, management, information system, marketing, operations management, organisational behaviour, political science, and policy and strategy.

Australia was well represented with five of the 44 papers presented by Australian academics interested in franchising. UNSW academics contributed three papers:

l Franchising in the New China: The regulatory environment for foreign franchisors, by Andrew Terry and Zhiqiong Wang

l New Directions in international franchising regulation, by Frank Zumbo

l Franchise failure in Australia: The impact on franchisees and potential solutions, by Jenny Buchan.

l Bond and Griffith Universities were also represented:

Regulating Franchising in Australia in a post-Code era, by Liz Spencer (Bond)

l Drivers and barriers to international expansion by Australian franchisors, by Lorelle Fraser, Scott Weaven and Bill Merrilees (Griffith).

Other research papers ranged from the conceptual to the heavily empirical; from the purely theoretical to those with a practitioner emphasis; from the quirky (Are Churches Franchises?) to the substantial; from the qualitative to the quantitative; from specific industry sector studies to country overviews; from particular issues to wider considerations; and, like franchising itself, from the excellent to the not so excellent. Papers of particular interest included:

l Beyond entry: Examining McDonald’s expansion in international markets

l A comparison of company-owned and franchised fast food outlet performance: insights from health inspection scores

l Case studies of ownership change

l Earning claims: To be or not to be, that is the question

l Exploring a franchise opportunity

l Conceptual framework for the performance of franchising networks

l Exploratory strategic failure management process model: Franchisee failure path-dependency and empirical evidence

l Does franchising create value: An analysis of the financial performance of US public restaurant firms

l Explaining franchisors’ choices of organisational forms within franchise systems

l Entrepreneurial franchise ventures: US and European failure, strategic perspective and empirical investigation

l The effectiveness of contractual self- enforcement and implications for the governance structure of franchising firms

l Location and marketing strategies: An empirical observation in the hotel industry

l Pizzas to burgers: A franchisee diversifies

l Seven years after: Turbulence in Slovenian franchising

l Institutional structure of franchising firms in Hungary

l Franchising and intellectual capital: A franchisee’s perspective

l CRM and franchise systems

l An exploratory comparison of dinning experience: Chain vs independent restaurants

l Entrepreneurial autonomy, incentives and relational governance in franchise chains

l Executive insights: Analysing market opportunities for franchising in the Philippines

l The internet and conflict in franchised distribution channels

Franchising: The entrepreneurial paradox

l The efficiency of an organisational form: The case of franchising

l Network as an international enterprise strategy

l Improvement of the franchising management of petroleum products.

The abstracts of all 400-plus ISOF papers can be viewed on the ISOF website that, being hosted by the US Business School which provides its secretariat, is regrettably complex: hhtp://www.huizenga.nova.edu/business/internationalSocietyFranchising.cfm. Full papers can be purchased from the ISOF via the website.

As an academic, albeit with a life outside the ivory towers, I have found franchising to be a fascinating, important, rich, exciting and relevant field of research. I am constantly bemused that a business strategy which is so significant both domestically and internationally attracts little interest from academic colleagues across the range of disciplines that can make a contribution to a better understanding of the world’s most exciting and dynamic distribution strategy. The challenge for the Australian franchising sector, as it is for every franchising sector, is to encourage a strong research culture focused on it. An interesting initiative in this respect is that of the French Franchise Federation, which each year, through a committee representing wide sector interests, identities a multidisciplinary project of interest and significance to the French franchise sector. Sponsored funding of about A$75,000 is provided to the successful project team selected from those multidisciplinary/multi-university research teams which submit proposals. Members of the successful project team are not exclusively, or even primarily, traditional franchising academics, but scholars from disparate disciplines who can bring their unique disciplinary perspective and insights to bear on the research topic. The research findings are presented at an annual seminar.

As Governor of the Franchise Academy established by the FCA to oversee educational and research initiatives, I of course have a responsibility to try to build a closer and more productive relationship between the franchising sector and academics researching in areas relevant to franchising. The insights from the real world of franchising are a necessary and valuable guide to academic researchers, and suggestions for appropriate and compelling research areas are always welcomed. My empirical colleagues would not forgive me if I omitted to note that the quality of research depends on the quality of the data. Responding to surveys can be frustrating and is time-consuming but is nevertheless a necessary pre-requisite to quality research. Increasingly these surveys or requests for interviews may come from students – but this at least demonstrates that franchising is finally being taken seriously within our universities and by a new generation of students from widely diverse disciplines whose initial contact with the franchising sector is likely to be influential in their future careers. l

Andrew Terry is a professor and head of the School of Business Law and Taxation at the University of New South Wales and special counsel at Deacons . He can be contacted at a.terry@unsw.edu.au.