Handbook of Research on Franchising
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Handbook of Research on Franchising

Edited by Frank Hoy, Rozenn Perrigot and Andrew Terry

Franchising is one of the major engines of business expansion and job creation globally. The Handbook of Research on Franchising offers new insights into entrepreneurial behavior, organizational forms, regulation, internationalization, and other contemporary issues relating to this dynamic business strategy. The Handbook challenges both practitioners and scholars to give attention to the conclusions of scholarly research on this business model. Practitioners can benefit from the results of high quality scientific research, and scholars can find exciting opportunities for contributing to the body of knowledge of a subject that has not received sufficient attention in educational institutions.
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Chapter 6: Exploring the growth of multi-unit franchising

Benjamin Lawrence, Cyril Pietrafesa and Patrick J. Kaufmann


This chapter explores, from the practitioner’s perspective, factors that have led to the growth of multi-unit franchising in the US market. Informants point to both operational and financial factors driving multi-unit growth. Semi-structured interviews with multi-unit franchisees informed three main themes related to financial benefits including Law of Averages, Margin Pressure and Capital Raising Potential. Financial benefits include the ability to absorb the financial stress of low-performing units, addressing decreasing industry margins via unit consolidation and the availability of capital to fund growth. In relation to operational benefits, informants highlighted the superior Economies of Scale, Operational Expertise and Incentive Structures in driving the growth of multi-unit operations. Operational benefits include the development of a corporate infrastructure providing scale advantages, higher operating performance resulting from higher reinvestment in assets and incentive structures that mimic the franchise relationships that can incentivize unit managers. Based on the findings the authors propose fruitful avenues for future work.

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