E-Business Strategy in Franchise Relationship Management

Franchising as a global growth strategy, especially in emerging markets, is gaining its popularity. For example, the U.S. Commercial Service estimated that China, having over 2,600 brands with 200,000 franchised retail stores in over 80 sectors, is now the largest franchise market in the world. The popularity of franchising continues to increase, as people witness an emergence of a new e-business model, Netchising, which is the combination power of the Internet for global demand-and-supply processes and the international franchising arrangement for local responsiveness. The essence of franchising lies in managing the good relationship between the franchisor and the franchisee. This paper shows e-business strategy plays an important role in growing and nurturing such a good relationship. Specifically, the authors discuss: managing the franchisor/ franchisee relationship, harnessing the e-business strategy, aligning the e-business strategy with application service providers, and an attention-based framework for franchisee training. DOI: 10.4018/jsita.2012010104 International Journal of Strategic Information Technology and Applications, 3(1), 54-65, January-March 2012 55 Copyright © 2012, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. known for its Franchise 500 listing – in 2001 included Tech Businesses into its Franchise Zone that contains Internet Businesses, Tech Training, and Miscellaneous Tech Businesses. At the time of this writing, 42 companies are on its list. In his best seller, Business @ the Speed of Thought, Bill Gates (1999, p. 6) wrote: “Information Technology and business are becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without talking about the other.” Gates’ point is quite true when one talks about e-business strategy in franchising. Thus, to see how ebusiness can be “meaningfully” integrated into franchising, one needs to know how franchising really works. The success of networks, such as franchising, strategic alliances, joint ventures and clusters is highly dependent on the capability to create and transfer knowledge within the network (Gorovaia & Windsperger, 2010) and e-business strategy just can work if it combines the business model, business technology and value the network (Lin & Hsia, 2011). FRANCHISING: DEVELOPING THE FRANCHISOR/ FRANCHISEE RELATIONSHIP Franchising is “a business opportunity by which the owner (producer or distributor) of a service or a trademarked product grants exclusive rights to an individual for the local distribution and/ or sale of the service or product, and in return receives a payment or royalty and conformance to quality standards. The individual or business granting the business rights is called the franchisor, and the individual or business granted the right to operate in accordance with the chosen method to produce or sell the product or service is called the franchisee” (Justis & Judd, 2002, pp. 1-3). Developing a good franchisor/franchisee relationship is the key for a successful franchise (Justis & Judd, 2002). Figure 1 describes how to develop a good franchisor/franchisee relationship. The franchisor needs to learn continuously for the growth of the franchise. The learning process is developed through five stages (Justis & Judd, 2002): (1) Beginner – learning how to do it; (2) Novice – practicing doing it; (3) Advanced – doing it; (4) Master – teaching others to do it; and (5) Professional – becoming the best that you can be. Once reaching the Advanced stage, most preceding struggles have been overcome. However, further challenges will arise as the franchise continues growing, especially in the global markets. This is especially true once the system reaches the “Professional” stage, where various unpredicted and intricate problems could arise. Bud Hadfield (1995, p. 156), the founder of Kwik Kopy franchise and the International Center of Entrepreneurial Development, aptly stated: “The more the company grows, the more it will be tested.” To capture the learning process, a counter-clockwise round dashed arrow surrounding the franchisor is used to depict the increasing intensity of learning as the franchisor continues to grow. The franchisee also goes through five stages of franchisee life cycle (Schreuder, Krige, & Parker, 2000): (1) Courting: both the franchisee and the franchisor are eager with the relationship; (2) “We”: the relationship starts to deteriorate, but the franchisee still values the relationship; (3) “Me”: the franchisee starts to question the franchisor that the success so far is purely of his/her own work; (4) Rebel: the franchisee starts to challenge the franchisor; and (5) Renewal: the franchisee realizes the “win-win” solution is to continue working with the franchisor to grow the system. Similar to the franchisor, a counter-clockwise round arrow surrounding the franchisee is used in Figure 1 to depict the increasing intensity as the franchisee continues growing. As the franchisee progresses through the life cycle, the good relationship gradually develops an influencing process (Justis & Vincent, 2001), depicted in Figure 1 with a bi-directional arrow. By going through the processes of learning and influencing, both the franchisor and the franchisee gain the progressive working knowledge of relationship management with the consumers and suppliers. The franchisor, the franchisee, the consumers, and the suppliers in Figure 1 are 10 more pages are available in the full version of this document, which may be purchased using the "Add to Cart" button on the product's webpage: www.igi-global.com/article/business-strategy-franchiserelationship-management/63006?camid=4v1 This title is available in InfoSci-Journals, InfoSci-Journal Disciplines Library Science, Information Studies, and Education. Recommend this product to your librarian: www.igi-global.com/e-resources/libraryrecommendation/?id=2