Skip to main content
SpringerLink
Log in

Franchise Firms: Changing Employment Relations?

  • Chapter
The Future of Employment Relations

Abstract

Modern franchises can be traced back to the turn of the 20th century when franchising began to emerge as the distribution model of choice in the automotive industry. Henry Ford lacked the required capital to establish company-owned chains to sell vehicles and so focussed his efforts on developing a network of dealers to both market and sell his product (Justis & Judd, 2003). This approach was so successful that it was replicated by other automotive businesses and is still a popular distribution model in the automotive industry. However, modern franchising began to develop more significantly in the mid 1950s, when Ray Croc and Colonel Harlan Sanders opened their iconic American franchises, McDonald’s and Kentucky Fried Chicken respectively. Into the 1960s a plethora of businesses followed suit, operating franchise systems that sold products and services as varied as clothing retail, lawn mowing, and convenience stores (Justis & Judd, 2003). Franchising is currently the world’s fastest growing form of retailing (Dant, 2008). Franchises are complex forms of organization and hold important implications for the future of employment relations (ER). Some of these implications are explored in this chapter.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

5 Franchise Firms: Changing Employment Relations?

  • ABS (2008). Selected characteristics of Australian business, 2007–08, cat. 8167.0: Australian Bureau of Statistics.

    Google Scholar 

  • Allan, C., Bamber, G., Gould, A., & Timo, N. (2001). Good job or bad job? Fast food employment in Australia. Paper presented at the Employment Relations Stakeholders in the New Economy Conference and Symposium, Singapore.

    Google Scholar 

  • Bates, T. (1995). Analysis of survival rates among franchise and independent small business startups. Journal of Small Business Management, 33(2), 26.

    Google Scholar 

  • Baucus, D., Baucus, M., & Human, S. (1993). Choosing a franchise: how base fees and royalties relate to the value of the franchise. Journal of Small Business Management, 31(2), 91.

    Google Scholar 

  • Baum, J., Li, S., & Usher, J. (2000). Making the next move: how experiential and vicarious learning shape the location of chains’ acquisitions. Administrative Science Quarterly 45(4), 766–801.

    Article  Google Scholar 

  • Bayo-Moriones, J., & Cerio, J. (2001). Size and HRM in the Spanish manufacturing industry. Employee Relations, 23(2), 188–202.

    Article  Google Scholar 

  • Bolton Committee Report. (1971). Report of the Commission of Inquiry on Small Firms, Chaired by JE Bolton, Cmnd 4811. London: HMSO.

    Google Scholar 

  • Boxall, P. (2003). HR strategy and competitive advantage in the service sector. Human Resource Management Journal, 13(3), 5–20.

    Article  Google Scholar 

  • Cappelli, P., & Hamori, M. (2008). Are franchises bad employers? Industrial and Labor Relations Review, 61, 147–162.

    Article  Google Scholar 

  • Cassell, C., Nadin, S., Gray, M., & Clegg, C. (2002). Exploring human resource management practices in small and medium sized enterprises. Personnel Review, 31(5/6), 671–692.

    Article  Google Scholar 

  • Castrogiovanni, G., Combs, J., & Justis, R. (2006). Resource scarcity and agency theory predictions concerning the continued use of franchising in multi-outlet networks. Journal of Small Business Management, 44(1), 27.

    Article  Google Scholar 

  • Castrogiovanni, G., Justis, R., & Julian, S. D. (1993). Franchise failure rates: an assessment of magnitude and influencing factors. Journal of Small Business Management, 31(2), 105.

    Google Scholar 

  • Clarkin, J., & Swavely, S. (2006). The importance of personal characteristics in franchisee selection. Journal of Retailing and Consumer Services, 13, 133–142.

    Article  Google Scholar 

  • Combs, J., & Castrogiovanni, G. (1994). Franchisor strategy: a proposed model and empirical test of franchise versus company ownership. Journal of Small Business Management, 32(2), 37.

    Google Scholar 

  • Combs, J., Ketchen, D., & Hoover, V. (2004). A strategic groups approach to the franchising-performance relationship. Journal of Business Venturing, 19(6), 877.

    Article  Google Scholar 

  • Combs, J., Michael, S. C., & Castrogiovanni, G. (2004). Franchising: a review and avenues to greater theoretical diversity. Journal of Management, 30(6), 907–931.

    Article  Google Scholar 

  • Cully, S., Woodland, S., O’Reilly, A., & Dix, G. (1998). Britain at work as depicted in the 1998 workplace employee relations survey. London: Routledge.

    Book  Google Scholar 

  • Dant, R. (1996). Motivations for franchising: rhetoric versus reality. International Small Business Journal, 14(1), 10–32.

    Article  Google Scholar 

  • Dant, R. (2008). A futuristic research agenda for the field of franchising. Journal of Small Business Management, 46(1), 91.

    Article  Google Scholar 

  • Dundon, T., & Wilkinson, A. (2009). HRM in small and medium sized enterprises. In G. Wood & D. Collings (Eds.), Human Resource Management: A Critical Introduction. London: Routledge.

    Google Scholar 

  • Edwards, P., & Ram, M. (2009). HRM in Small Firms: Respecting and Regulating Informality. In A. Wilkinson, N. Bacon, T. Redman & S. Snell (eds), The Sage Handbook of Human Resource Management (pp. 524–540). London: Sage Publications.

    Google Scholar 

  • Eisenhardt, K. M. (1989). Agency theory: an assessment and review. Academy of Management Review, 14(1), 57.

    Google Scholar 

  • Elango, B., & Fried, V. (1997). Franchising research: a literature review and synthesis. Journal of Small Business Management, 35(3), 68.

    Google Scholar 

  • Felstead, A. (1991). The social organisation of the franchise: a case of ‘controlled self-employment’. Work, Employment and Society, 5(1), 37–57.

    Article  Google Scholar 

  • Felstead, A. (1993). The corporate paradox: power and control in the business franchise. London: Routledge.

    Google Scholar 

  • Forth, J., Bewley, H., & Bryson, A. (2006). Small and medium sized enterprises: findings from the 2004 Workplace Employment Relations Survey. London: Routledge.

    Google Scholar 

  • Frazer, L., Weaven, S., & Wright, O. (2008). Franchising Australia 2008. The Franchise Council of Australia, Asia-Pacific Centre for Franchising Excellence, Griffith University.

    Google Scholar 

  • Frazer, L., & Winzar, H. (2005). Exits and expectations: why disappointed franchisees leave. Journal of Business Research, 58(11), 1534.

    Article  Google Scholar 

  • Friedlander, F., & Pickle, H. (1968). Components of effectiveness in small organisations. Administrative Science Quarterly, 13, 289–304.

    Article  Google Scholar 

  • Grant, C. (1985). Business format franchising: a system for growth. London: Economist Intelligence Unit.

    Google Scholar 

  • Grunhagen, M., & Dorsch, M. (2003). Does the franchisor provide value to franchisees? Past, current, and future value assessments of two franchisee types. Journal of Small Business Management, 41(4), 366.

    Article  Google Scholar 

  • Grunhagen, M., & Mittelstaedt, R. (2005). Entrepreneurs or investors: do multiunit franchisees have different philosophical orientations? Journal of Small Business Management, 43(3), 207.

    Article  Google Scholar 

  • Hallowell, R., Schlesinger, L. A., & Zornitsky, J. (1996). Internal service quality, customer and job satisfaction: linkages and implications for management. Human Resource Planning, 19(2), 20.

    Google Scholar 

  • Harmon, T., & Griffiths, M. (2008). Franchisee perceived relationship value. Journal of Business & Industrial Marketing, 23(4), 256.

    Article  Google Scholar 

  • Hayashi, A. (2008). How to Replicate Success. MIT Sloan Management Review, 49(3), 6.

    Google Scholar 

  • Hing, N. (1995). Franchisee satisfaction: contributors and consequences. Journal of Small Business Management, 33(2), 12.

    Google Scholar 

  • Holmberg, S., & Morgan, K. B. (2003). Franchise turnover and failure: new research and perspectives. Journal of Business Venturing, 18(3), 403.

    Article  Google Scholar 

  • IFA (2002). Multi-unit owners study. Washington, DC: International Franchise Association Educational Foundation.

    Google Scholar 

  • Inma, C. (2005). Purposeful franchising: re-thinking of the franchising rationale. Singapore Management Review, 27(1), 27.

    Google Scholar 

  • Jambulingam, T., & Nevin, J. (1999). Influence of franchisee selection criteria on outcomes desired by the franchisor. Journal of Business Venturing, 14(4), 363.

    Article  Google Scholar 

  • Justis, R., & Judd, R. (2003). Franchising. Ohio: Thomson Custom Publishing.

    Google Scholar 

  • Kaufmann, P., & Dant, R. (1996). Multi-unit franchising: growth and management issues. Journal of Business Venturing, 11(5), 343.

    Article  Google Scholar 

  • Kaufmann, P., & Lafontaine, F. (1994). Costs of control: the source of economic rents for mcdonald’s franchisees. Journal of Law and Economics, 37(2), 417–453.

    Article  Google Scholar 

  • Kelliher, C., Truss, C., & Hope-Hailey, V. (2004). Disappearing between the cracks: HRM in permeable organisations. Management Revue, 15(3), 305–323.

    Google Scholar 

  • Kinnie, N., Swart, J., & Purcell, J. (2005). Influences on the choice of HR system: the network organisation perspective. International Journal of Human Resource Management, 16(6), 1004–1028.

    Article  Google Scholar 

  • Krueger, A. (1991). Ownership, agency, and wages: an examination of franchising in the fast food industry. Quarterly Journal of Business and Economics, 106(2), 75–101.

    Google Scholar 

  • Lafontaine, F. (1992). Agency theory and franchising: some empirical results. Rand Journal of Economics, 23(2), 263.

    Article  Google Scholar 

  • LaFontaine, F., & Kaufmann, P. (1994). The evolution of ownership patterns in franchise systems. Journal of Retailing, 70(2), 97–113.

    Article  Google Scholar 

  • Litz, R., & Stewart, A. (2000). Research note: trade name franchise membership as a human resource management strategy: does buying group training deliver ‘true value’ for small retailers? Entrepreneurship Theory and Practice, 25(1), 125.

    Google Scholar 

  • Marchington, M., Grimshaw, D., Rubery, J., & Willmot, H. (2005). Fragmenting Work. New York: Oxford University Press.

    Google Scholar 

  • Matlay, H. (1999). Employee relations in small firms. Employee Relations, 21(3), 285–295.

    Article  Google Scholar 

  • Parkington, J., & Schneider, B. (1979). Some correlates of job stress: a boundary role study. Academy of Management Journal, 22, 270–281.

    Article  Google Scholar 

  • Paswan, A., Pelton, L., & True, S. (2005). Perceived managerial sincerity, feedback-seeking orientation and motivation among front-line employees of a service organization. Journal of Services Marketing, 19(1), 3–12.

    Article  Google Scholar 

  • Phan, P., Butler, J., & Lee, S. (1996). Crossing mother: entrepreneur-franchisees’ attempts to reduce franchisor influence. Journal of Business Venturing, 11(5), 379.

    Article  Google Scholar 

  • Ram, M. (1994). Managing to Survive: Working Lives in Small Firms. Oxford, UK: Blackwell.

    Google Scholar 

  • Royle, T. (1995). Corporate versus societal culture: a comparative study of McDonald’s in Europe. International Journal of Contemporary Hospitality Management, 7(2), 52.

    Article  Google Scholar 

  • Schlosser, E. (2002). Fast Food Nation. London: Penguin.

    Google Scholar 

  • Schneider, B. (1994). HRM – A service perspective: towards a customer-focused HRM. International Journal of Service Industry Management, 5(1), 64.

    Article  Google Scholar 

  • Shane, S. (1996). Hybrid organizational arrangements and their implications for firm growth and survival: a study of new franchisors. Academy of Management Journal, 59(1), 216–234.

    Article  Google Scholar 

  • Shane, S., & Hoy, F. (1996). Franchising: a gateway to co-operative entrepreneurship. Journal of Business Venturing, 11, 325–327.

    Article  Google Scholar 

  • Sisson, K. (1993). In search of HRM. British Journal of Industrial Relations, 31(2), 201–210.

    Article  Google Scholar 

  • Spinelli, S., & Birley, S. (1996). Toward a theory of conflict in the franchise system. Journal of Business Venturing, 11(5), 329.

    Article  Google Scholar 

  • Stanworth, J., & Curran, J. (1999). Colas, burgers, shakes, and shirkers: towards a sociological model of franchising in the market economy. Journal of Business Venturing, 14(4), 323.

    Article  Google Scholar 

  • Stephenson, P. R., & House, R. G. (1971). A perspective on franchising: the design of an effective relationship. Business Horizons, 14(4), 35–42.

    Article  Google Scholar 

  • Swart, J., Kinnie, N., & Purcell, J. (2004). Human resource advantage in the network organisation. Management Revue, 15(3), 288–304.

    Google Scholar 

  • Tracey, P., & Jarvis, O. (2007). Toward a theory of social venture franchising. Entrepreneurship Theory and Practice, 31(5), 667.

    Article  Google Scholar 

  • Truss, C. (2004). Who’s in the driving seat? Managing human resources in a franchise firm. Human Resource Management Journal, 14(4), 57.

    Article  Google Scholar 

  • Weaven, S., & Herington, C. (2007). Factors influencing governance choice and human resource management within services franchising networks. Journal of Management and Organization, 13(2), 126–144.

    Article  Google Scholar 

  • Wilkinson, A. (1999). Employment relations in SMEs. Employee Relations, 21(3), 206–217.

    Article  Google Scholar 

  • Wiseman, J., Roe, P., & Elliot, J. (2006). Annual survey of small businesses: UK 2004–2005. Department of Trade and Industry Research Report. London.

    Google Scholar 

Download references

Authors
  1. Ashlea Kellner
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Keith Townsend
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Adrian Wilkinson
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Centre for Work, Organisation and Wellbeing, Griffith University, Australia

    Adrian Wilkinson  & Keith Townsend  & 

Copyright information

© 2011 Ashlea Kellner, Keith Townsend, and Adrian Wilkinson

About this chapter

Cite this chapter

Kellner, A., Townsend, K., Wilkinson, A. (2011). Franchise Firms: Changing Employment Relations?. In: Wilkinson, A., Townsend, K. (eds) The Future of Employment Relations. Palgrave Macmillan, London. https://doi.org/10.1057/9780230349421_5

Download citation

Publish with us

Policies and ethics

Search

Navigation