MODELING THE NEW FRANCHISE CREATION DECISION: THE RELEVANCE OF BEHAVIORAL REASONS

MODELAGEM DA DECISÃO DE CRIAÇÃO DE NOVAS FRANQUIAS: A RELEVÂNCIA DOS MOTIVOS COMPORTAMENTAIS

MODELAJE DE LA DECISIÓN DE CREACIÓN DE NUEVAS FRANQUICIAS: LA RELEVANCIA DE LOS MOTIVOS COMPORTAMENTALES

ABSTRACT

Purpose:

Franchising is one of the fastest-growing operating modes in Brazil. In 2014, the Brazilian Franchising Association reported 2,492 active brands in the country. Some theories with an economic point of view, such as the agency theory, plural forms theory, or scarcity principle, explain why companies choose franchising. However, did the decision makers and founders of these franchises decide on this strategy taking only economic reasons into consideration? The purpose of this study is to understand the a priori criteria (prior to the decision) that executives took into account when adopting this strategy and the key motivations for this decision.

Originality/gap/relevance/implications:

The literature emphasizes the economic reasons for the success of the franchise model, but it does not focus on the founders' motivations when they choose this strategy. This is the gap that this study seeks to address. Dissonance could arise between economic reasons and entry motivations that could result in consequences for the management of new franchises.

Key methodological aspects:

Ten companies of different industries and different life cycle stages involved with the franchise model were scrutinized using a semi-structured questionnaire based on the literature on decision theory and franchising.

Summary of key results:

Behavioral factors significantly influence decision makers when choosing the franchise model.

Key considerations/conclusions:

This study distinguishes the economic reasons from the executives' motivations when choosing the franchise model and highlights the importance of non-economic factors in this decision.

KEYWORDS:
Decision theory; Franchising; Decision criteria; Franchisor; Decision model