Can a Franchise Chain Coordinate?

Abstract

In addition to traditional corporations, today'sbusiness environment also includes hybrid organizations, such as joint ventures, strategic alliances, and franchise chains. The properties of each of these new organizational forms are the subject of considerable research and significant literature. However, the difference between these "hybrid forms" and traditional companies should be more studied. Therefore, the ability of one hybrid form, the franchise chain, to coordinate elements of its marketing mix relative to corporate chains is examined. A 1992 survey of 35 franchise and corporate chains in the restaurant industry was used as a source of data on price and quality. Data for the third element of the marketing mix, advertising, were taken from Ad $ Summary from BAR/LNA multimedia service, 1991. The performance of corporate versus franchised chains was analyzed. Findings indicated that franchised chains are not able to integrate components from the marketing mix -- price, advertising, and quality -- as well as corporate chains do. (SFL)

Keywords: Hybrid organizations, Joint ventures, Franchises, Corporations, Organizational structures, Marketing, Advertising, Firm performance, Restaurant industry, Prices, Market strategies, Quality of services