An empirical analysis of the benefits and limitations for restaurant franchisees

Franchising is becoming increasingly prevalent in many Western economies, particularly in the foodservice and lodging sectors of the hospitality industry. However, the literature on franchising contains many unsubstantiated claims regarding the advantages and disadvantages of franchising for franchisees. This article reports the findings of an empirical study into the satisfaction of foodservice franchisees with numerous benefits and limitations theoretically associated with purchasing and operating a franchised outlet. The findings indicate that, while many of the benefits for franchisees were empirically supported, considerable dissatisfaction was evident with various aspects relating to the financial costs and contractual controls imposed by franchisors and with the imbalance of power in franchise relationships. However, most franchisees seem willing to accept these limitations as fair exchange for the substantial benefits they receive in choosing to purchase a franchised, rather than independent, business.