FRANCHISEES’ PARTNER SELECTION PROCESS: A QUALITATIVE RESEARCH IN FOOD SECTOR

Abstract

1. LITERATURE

• RESEARCH SUBJECT

In addition to the increasing competition with the effect of globalisation, the high cost and risk of developing new products and entering new markets are among the fundamental reasons that motivate companies to work in partnership (Hitt, Dacin, Levitas, Arregle and Borza, 2000; Tuunanen and Hyrsky, 2001; Guilloux, Gauzente, Kalika and Dubost, 2004). Franchising has also emerged as a form of a strategic partnership that expands faster and more robust than other types of partnerships in international service industries (Doherty and Alexander, 2004; Alon, 2006).  In this strategic partnership, one of the essential management functions is partner selection. These selection processes and their consequences have potentially far-reaching effects on the customer's perception of the business, organisational cooperation and financial performance of a firm. The importance of partner selection becomes apparent, especially when considering that the parties have to fulfil their obligations for a long time by sticking to the contract and that the parties generally make significant financial investments in their business relations (Clarkin and Swavely, 2006). In the literature, studies conducted to investigate the reasons for partner selection in franchising (Clarkin and Swavely, 2006; Altinay, Brookes, Madanoglu and Aktas, 2014; Brookes and Altinay, 2011; Doherty, 2009), examine selection process and reasons of results from two perspectives in terms of franchisor and franchisee. This research has been designed based on research question about which factors do franchisees operating in the food sector in Antalya and Burdur provinces take into account in the selection of the franchisor.

• RESEARCH PURPOSE AND IMPORTANCE

In this research, determining the factors that franchisees operating in the food sector in Antalya and Burdur provinces take into account in the selection of the franchisor is aimed. Also, these factors were compared with demographic variables, difficulties experienced during the franchising agreement and difficulties experienced after the franchising agreement.

The findings may shed light on the franchisees’ factors that should be considered in the selection process. Also, it is believed that franchisees can more clearly identify the priority areas they need to develop themselves in order to find better partners.

• CONTRIBUTION of the ARTICLE to the LITERATURE

This study will try to contribute to the literature by providing information about the details of partner selection, which is one of the essential pillars of the franchising system in Burdur and Antalya.

1. DESIGN AND METHOD
   • RESEARCH TYPE

This study is a research article, and qualitative research design was adopted.

• RESEARCH PROBLEMS

In this study, the authors tried to find out the criteria which franchisees take into account while selecting partners.

• DATA COLLECTION METHOD

The data was collected from franchisees operating in the food sector in Antalya and Burdur provinces. The widespread use of the franchise system in the food industry in Turkey (Alkan, 2015) has been effective in choosing this sector.  In this study, the interview method was used. Semi-structured interview technique was selected to get in-depth information in interviews with franchisees. Before starting the interviews, the relevant literature was scanned, and some of the questions that can be included in the research have been determined. Additional questions were also directed during the interview. The method of convenience and snowball sampling was used in creating the sampling. After collecting data from 16 franchisees, the answers began to repeat; for this reason, the interviews were concluded.

• QUANTITATIVE / QUALITATIVE ANALYSIS

In the study, the content analysis, which is one of the qualitative analysis, was performed.

1. FINDINGS AND DISCUSSION
   • FINDINGS as a RESULT of ANALYSIS

It has been determined that concept - product diversity, bilateral relations, brand, company potential, professionalism, product and service standard, compliance of investment conditions, profitability ratio and logistic support are the factors that franchisees pay the most attention.

Examining whether there is a differentiation in the selection of franchisees in terms of businesses specialised in beverage and food, it is seen that the enterprises in the food sector focus more on professionalism, compliance of investment conditions and product - service standards. On the other hand, in the beverage sector, the concept is preferred out.

When the experience of franchisees was examined, it is seen that franchisees are generally inexperienced in the sector and the franchising system. Results show that experienced franchisees give importance to the concept - product variety and inexperienced ones rely more on bilateral relations.

According to results which are about the comparison of scale, it was determined that the number of enterprises that chose a national brand was higher and these enterprises pay attention to bilateral relations and compliance of investment conditions. On the other hand, findings show that the selection process of businesses who want to work with international businesses is more professionally.

Criteria of franchisees with different geographical conditions do not differ from each other.

The finding of education level shows that the number of franchisees who have a bachelor's or higher degree is more—individuals with a high level of education select franchisors that have a pleasant concept and high product variety.

According to the findings, more than half of the entrepreneurs (11 businesses) expressed their satisfaction. Besides, it is seen that most of the enterprises (10 enterprises) are active when franchisees were examined after one year later from the interview made. In the study, it was determined that almost all of the unsatisfied businesses take bilateral relations into consideration. On the other hand, it is observed that businesses that can continue their activities attach relatively importance to bilateral relations. This situation presents a complex outlook.

Whether the franchisees had difficulties during the agreement is examined, and the results show that entrepreneurs encountered problems such as financing, franchisee identity, unilaterality of the contract, location selection and long start-up period as a franchisee.

The problems faced by franchisees after starting the franchising system are misleading/inadequate consultancy, difficulties arising from not being able to dominate the contract terms, supply difficulties and difficulties arising from the lack of sufficient experience of the franchisor. On the other hand, four businesses stated that they had no difficulties after starting their businesses. It has been observed that these enterprises do not take into account the strong growth potential and the suitability of investment conditions.

• DISCUSSING the FINDINGS with the LITERATURE

When the studies investigating the essential factors are examined, it is seen that the brand is the most emphasised factor (Altinay, Brookes, and Aktas, 2013). Also, some researches (Seven, 2007; Arman, Ekşili, Kıran, and Çetinkaya Bozkurt, 2019) determined that branding is the most significant driving force for companies in the food sector to prefer franchising. The focus of the brand makes the results similar to literature. However, even if the brand is placed near the top in the results of the study, the concept - product diversity and bilateral relations have surpassed the brand in the sample where the research was conducted. According to literature; the franchisees, who examine the product from different angles, state that the reasons of selecting product are their quality, cleanness, healthiness and safety of product especially in the food sector or their potential to take a market opportunity such as entering the shopping mall (Altinay, Brookes, and Aktas, 2013).  Product diversity and product service standard stand out in the selection of the franchisor in this study, as in other studies.

According to research, there is differentiation in the partner selection process between the food and beverage sector. It is thought that the reason for this difference is the sample. In the sample, businesses in the beverage sector are generally coffee shops. While coffee shops evoke sociality, pleasure and sharing, they have changed to become places where different types of coffee are served in different tastes, various appearances and alternative food in addition to drinks are served besides coffee. (Akarçay, 2012 s. One hundred eighty-six cited from Aşık, 2017). Aşık (2017) stated that the most critical factors in the choice of brand in the coffee shops are taste and presentation, price, service quality and service speed, the wide variety of coffee and the decoration of the shop, respectively.

According to the results, the number of experienced franchisees is less than inexperienced ones. The result is expected. Individuals who want to start their own business with their savings and do not have the skills, confidence or experience, are more advantageous in the franchising system than starting a new business (Aslanoğlu, 2007: 81). Individuals can reach a level where they can produce and sell goods and services in an area previously unknown to them (Tuncay, 1992: 51 as cited in Kurt and Korkmazyürek, 2019: 31). For that reason, inexperienced businesses will be more inclined to engage with the franchisor than experienced businesses. When the subject is examined in terms of franchisors perspective, the literature is contradictory. Clarkin and Swavely (2006) mentioned working with inexperienced franchisees’ advantages and disadvantages. Also, Jambulingham and Nevin (1999) accept as disadvantages. According to the results, inexperienced businesses rely more on bilateral relations than experienced ones. It is thought that the difference in selection proses is an expected result. Businesses that do not have any experience cannot make a task-oriented choice; for that reason, they make partner-oriented choices.

It is argued that different social factors in different regions, habits, rules and norms in that region may affect the companies and that economic activities will be shaped by this social structure (Simmie, 2001 as cited in Albayrak and Erkut, 2010). In this direction, two different provinces were compared, and contrary to expectations, no difference was observed.

The result of the number of high education level is similar to literature (Alkan, 2015; Seven, 2007; Kurt and Korkmazyürek, 2019).

According to results, the difficulties experienced by the franchisees during the signing of the contract are different from the literature. Brookes and Altinay (2011) stated that after the starts of the negotiations, criteria related to the partner like the compatibility of the partners, the similarities between the parties' definitions of risk and value, visions, organisational cultures and goals rather than the characteristics of the franchising business are dominant. However, the results have related both partner and characteristics of the franchising.

The most common problem experienced after businesses started franchising which is misleading/inadequate consultancy is critical to the franchisee because the lack of continuous support to the partner by the franchisor is one of the common mistakes that fail the franchising system (Seven, 2007). The difficulties arising from not being able to master the terms of the contract which is the other problem is thought the result of the inexperience of the entrepreneurs or their lack of legal support. Entrepreneurs do not realise the conditions which are in favour of the franchisor, and they do not consult lawyers, or if they did, they do not find it useful (Abdullaev, 2011).

 Insufficient research can cause difficulties afterwards as well as during franchise negotiations. It is thought that the supply difficulties and the lack of experience of the franchisor company are the reason for lack of research.

1. CONCLUSION, RECOMMENDATION AND LIMITATIONS
   • RESULTS of the ARTICLE             

The result of the article is a concept - product diversity, bilateral relations, brand, company potential, professionalism, product and service standard, compliance of investment conditions, profitability ratio and logistic support are the factors that franchisees pay the most attention. When the comparison of the other variables, it is thought that the examined factors are not enough to start this relationship.

• SUGGESTIONS BASED on RESULTS

In the franchisor selection process, franchisees should take into account factors which are mentioned in the literature, be rigorous, intensify their research, and if necessary, seek legal support. Besides, subsequent studies may make this research dimensional while repeating interviews and analyses at certain time intervals. Also examining the subject from the perspective of the franchisor will add depth to the subject. Also, it is suggested that different regions and provinces should be included in the scope of the research in future studies.       

• LIMITATIONS of the ARTICLE

Conducting the research in only two provinces and being cross-sectional constitute are the most significant limitations of the study.