Franchise Partner Selection And Organisational Learning

According to (Gerringer, 1991), a broad interest about joint undertaking in partnership has been enhanced by Empirical studies of partner choice. The selection of partner in the Empirical studies with indication to franchising was examined by (Szymanski, et al, 1993). Their focus is largely based on criteria of selecting tasks and partner that are related and they include attitudes, character, specific experience about industry, skills in management, demographic attribute, financial power and general experience about a business. The information that is provided in these studies has enabled the franchisors to be more considerate in deciding on their partners. Nonetheless, in the franchise organizations, there is very little information that is known about the process of selecting the partners and the implications that it has on a string of its performance. In franchising, selection of a partner is one of its functions in management which is most important. An advanced research was carried out by Szymanski, et al (1993) stated, “the preliminary steps in the process of selection are little known and yet in the whole world there are hundreds of thousands of people who have joined the agreement of franchising.” The theories of franchising have enabled an indirect link to be established between the performance string and selection of a partner. Szymanski, et al, (1993) claimed that an effective selection of partner and teamwork that exist between franchisors and their franchisees enables a direct relationship to be established. This cooperation is very essential in a sequence of performances. There are two leading theories (Fulop and Forward, 1997), that is the resource scarcity theory and the agency theory.

In the agency theory (Elango and Fried, 1997), the divergent objectives between franchisors and their respective franchises result in the rise of agency setback and this come about due to some franchisees might follow their own benefits at the expense of the franchisors. In most cases, this is done by franchisees that are very opportunistic. From this argument, the performance chain to be consistent, standardization of the brand image is required therefore efficiency has to be emphasized in the whole system of franchise. This implies that (Fulop and Forward, 1997) for the objectives of the system of franchise to be realized, the partners that are recruited must be ready to contribute towards the same and it should also come up with operating channels, routines of the organization, marketing strategies that are extensive in the system (Murphy and Caves).

On the other hand, in the theory resource scarcity, franchising is viewed as the organization that is responsible for the resources that are insufficient for it to expand. They include; capital required for labor, talent in the managerial field and capital inform of finance and knowledge about local market. Critical resources which are in need of creating chains which are large are reached by organizations when they use franchising mechanism (Combs and Ketchen, 1999). This enables the organizations to gain an advantage which in the long run makes them to go in front in the number of vend channels. There is a yield in the market share as result of outlet share that is higher (Gerringer, 1991) also the profitability is affected by share of the market and this normally felt in the goods of consumers (Szymanski et al., 1993; Gerringer, 1991). The industry of restaurant has evidence of Empirical that support advantage of the first-mover. This is also likely to be present in any manufacturing company that has geographic element. From this statement it is evident that that the performance of that chain does not depend on the number of franchisees that the franchise system recruits. The franchisors are supposed to select partners so as to ensure that they come up with systems that are wide. This enables them to be consistent and hence they become standardized and more effective the expansion of outlets of franchise. The achievement depends on the quality of franchise associates recruited which is normally very demanding. The organizations that strongly protect their brands do not generally franchise (Fulop and Forward, 1997) and the quality of franchisees recruited is risked if they have expansion rate at their main mission. In international markets which are diverse, cultural background, the personal individuality, general business and specific information about the industry and the way in which the new venture is financed can vary (Combs and Ketchen, 1999). As a result of this, there is a challenge in the selection of the of the required franchise partner who is international because there is a jeopardy that the selected franchise may be connected with varied market environment. The franchisors should ensure that they study the needs that are needed locally and also have full knowledge about the situation of the local market in the process of choosing their collaborator; this enables their franchise relationship to be helpful. Since organizations are viewed as systems which are adaptive, it necessity that the two kinds of learning is balanced that is, utilization and discovery March (1991). In discovery education, external orientation is strongly considered and also penetration of new capabilities in terms of developments and knowledge are greatly emphasized. This makes the organization to be linked to adaptation and hence it departs from its potential that existed before. In utilization learning, the focus is tapping into present and interior knowledge and thus resulting into an incremental upgrading and standardization of the present abilities. Both discovery and utilization learning are important and in unstable situations organizations are normally required to come up with a way of balancing between upholding efficiency and firmness when rapid adjustments are normally adapted to, this is according to (March, 1991). Nevertheless, balancing is hard because severe variations are witnessed in both utilization and discovery learning. Utilization is a search that is aimed at emphasizing on short-term mean balance and limited variety while in discovery learning, the emphasis is on generating irregularity performance and variation (McGrath, 2001). March (1991, p 73) think that “compared to returns from exploitation, returns from exploration are systematically less certain, more remote in time, and organizationally more distant from the locus of action and adaptation …. The certainty, speed, proximity, and clarity of feedback ties exploitation to its consequences more quickly and more precisely than is the case with exploration”.

Though quick transformations make a constant need to adjust and gain knowledge of skills which are new, time needed to exploit the present capabilities and skills is reduced (Elango and Fried, 1997). However, the problem of competence trap is witnessed by organizations which use utilization form of learning and hence this limits utilization learning. Discovery can wipe out utilization and vice versa (Szymanski, et al 1993). In Sorenson and Sørensen’s (2001) study, the results of rival and its challenges to the sequence of performance is apparent in the learning of operations of systems of franchise. The way in which franchisors involve in utilization and discovery learning in the selection of pattern so as to contribute to succession performance is not much known. Assistance is offered by international franchising so as to reconcile the requirements for adaptation and consistency. On the other hand, the rival force that exist between the two types of learning with respect to adaptation and consistency show that the reconciliation of the goals of a steady brand and an expansion rate which is normally accelerated is an aspiration that is required for franchisors of international level. The process of selecting partners that is being researched in the literature as well as the management of franchising units determines their collapse or successes. From the above literature, the following research questions are supposed to be answered.

a) In the selection of international franchise partner, what processes are supposed to be involved in utilizing and discovery learning?

b) How is string performance balanced by discovery and utilizing learning in the selection of a partner.

RESEARCH DESIGN

The international hotel organization is used as an embedded unit in a lone case study. International hotel organization is taken as the focus of analysis so as to enable different levels of study to take place within a single case study (Szymanski, et al, 1993). Greater richness and various views in explaining the performance of the firm are appreciated by use of this approach. The hotel franchise operator in case analysis was the largest in the whole world. It is possessed by a conglomerate and it was a company that was openly listed on the London Stock Exchange. The geographical sections in which that the organization was operational, was divided into three regions, that is, the Middle East, the Americas, the Europe and the Asia Pacific and Africa region commonly known as (EMEA). The discoverer of hotel franchise idea was the original creator of the organization. This company enhanced accommodation to be in larg numbers in the US (Gerringer, 1991). There was a broad representation of this case study organization in the US but internationally it was on a smaller scale (Knabe et al., 2000).The informants and the region to investigated were chosen by use of purposive sampling because researchers were enabled to get best answers for their questions of research so as to meet objectives of research. Since in case study research, only small samples are needed so as to particularly select, purposive sampling is frequently used. An extreme case was selected in this analysis that is, the EMEA division that has its headquarter in London in the UK because some groups of hotels in this region did not grow due to lack of franchising tradition (Fulop and Forward, 1997).The varied international aspects of franchising were to be fully realized when great emphasis was to given to this region because it appeared to suggest vast opportunities for development of hotels which have brands of international level. Research showed that in the EMEA region only 24 percent of the hotels were branded with less than 60 percent of hotels branded in the United States (Knabe et al., 2000).

The interviews that were semi-structured enabled primary collection of qualitative facts. The intention of our sample was to impress both market levels of the country (a place where country managers identified prospective associates) and the divisional level of EMEA (a place where the resolution of picking a partner is reached). The sample at division level included Legal Counsels, Managers who support Business, Franchise Managers among other senior persons who were engaged in the process of international development. The sample in the markets of the country involved Country Managers (found in UK, Germany, Italy, France, Africa, Central Europe, Spain, Turkey and Benelux in that order). The one and a half hours interviews of semi-structured form were conducted. They were forty five in total. In exacting, matters that related to proposals of franchise have been in recent days discarded or accepted in countries like France, Germany, Spain, Italy, and Turkey which were investigated by informants. Facts from different viewpoints were allowed for consideration by use of this approach and in addition to this, different informants presented their proposals which had different views and hence this enabled each resolution to be discussed. This was used to prove or disapprove the deductions that were drawn from earlier ones and hence this improves the likelihood of accurate and reliable facts. Further, in this approach the probability of capturing the findings of novel came from different sides and hence adding thoroughness and prosperity to the outcomes. The twelve meetings that were observed in several country markets and that of division level were used to find out if data that was obtained from the interview correctly revealed that the experience of the participants who were implicated in the process was current (Combs and Ketchen, 1999).The observations involved surveillance a number of informants who were key interviewers so as get closer to their reality roles (Knabe et al., 2000). Condensed version of events was taken by use notes then finally documents of the company were also used as a corresponding means of collecting data. They were letters, formal reports, journals of trade, newspaper, proposals of external expansion, annual reports, memoranda, description of jobs of members of the organization, press and publication releases and minutes of meetings about the case study organization. These facts were compared and the analyzed with respect to outcomes from observations and interviews that were conducted by the informants. This triangulation of facts was very important in increasing the reliability of case data and hence clearly coming up with full view of the firm in form of selecting international franchise partners and the role of members of the organization in process. The analysis of thematic content was done by use of records that were obtained from the interview. Also there was the development of an analytic framework that was preliminary used so as to direct our study. It was a two-by-four matrix about two stages selection of a partner in international franchise (that is, identification of a partner and making a decision) which is used as axis and the theoretical framework that consist of three components(that is, utilizing learning, discovery learning and image branding) which is used another axis. The themes that come out are identified using facts that each informant obtained separately during the process of analyzing. Consequently, the subject matters that resulted from each interview that was carried out by informants were evaluated across all the individuals so as to come up with themes that related to the theoretical network that was proposed. Next, a comparison and a contrast of the concepts, themes and facts that resulted from data are the carried out. This is done with respect to extant literature on franchising of international standards and learning of the organization. The differences and resemblance identified were documented in form of memos then sorted into groups and connected which enabled a theoretical outline of connections across all categories to be established.

FINDINGS AND DISCUSSION

The case analysis organization positioned itself with a target of developing hence making it to become a major force in the entire of Europe by way international franchising. It attained a number of procedures that were to be used in selection of partners which include financial analysis, the market among other issues. When definite guiding principles are followed, the likelihood of maximizing the franchise relationship development of cooperatives is enhanced. In this case, partners who potential franchise were bankers, developments that were involved in the development of real estates, companies of hotel management, and consultants of intermediary level and owners of hotels.

Reference:

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