This paper aims to extend current understanding of organisational choice theory through examining to what extent firm‐level factors influence the growth of franchisee‐owned mini‐chains within Australian franchise systems. In particular, this study examines how the age of the system, corporatisation of management processes, plurality of distribution, levels of intra‐firm conflict and franchise system complexity influence multiple unit franchising adoption.
A qualitative methodology was adopted to gain a clearer picture of the salient issues influencing multiple unit franchising adoption from the franchisor's perspective.
The research reveals that mature franchise systems in Australia use sequential methods of multiple unit franchising expansion in order to minimise adverse selection costs and leverage learning economies derived from previous experiences in managing intra‐firm channel relationships.
Industry‐specific influences and differences in managerial orientations may limit the predictive application of this study to all franchise systems. However, on balance the reflections offered by the participants provide a rich and valuable source of information about the factors influencing their willingness to encourage this growth strategy.
Franchisors need to consider upfront whether they are ready and able to encourage multiple unit ownership within their systems. Less experienced franchisors may need to corporatise operations, minimise channel conflict and introduce administrative support procedures to ensure the recruitment of suitable franchisee candidates who will assist in realising the franchisor's goals, thus promoting a harmonious franchising relationship.
Whereas, previous research has investigated motivations for encouraging multiple unit franchising, this paper supplements that literature by examining multiple unit franchising within Australia.
