Bridging the Operational Efficiency Differences between Franchisors and Franchisees: A Metafrontier Approach

A franchise business is a contractual relationship in which the franchisor and franchisee should cooperate to promote sustainable growth of their entities. However, it still unclear whether between franchisees franchisors principal–agent or partner sharing goal. Thus, this study first attempt investigate franchises using metafrontier bootstrap DEA from perspective efficiency. We measured efficiency coffee Korea, have grown rapidly recent years despite COVID-19 pandemic. Based on results, there was statistically significant difference under variable return-to-scale assumption. While main cause inefficiency premium chains attributed scale inefficiency, most pure technological inefficiency. can improve operational by adjusting reallocating service resources. This demonstrates tailored plans mainstream offers strategic initiatives decrease franchisees.