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Quasi-Franchising: A New Model for Strategic Business Cooperation

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Network Governance

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

Abstract

Franchising’s capacity for reinventing itself is a matter of record. Indeed its continual adaptation to accommodate changing circumstances and market conditions is a major factor in its increasing influence throughout the world. The franchising relationship is based on a prescribed business model developed by the franchisor and carried out under the franchisor’s guidance and oversight by franchisees who are granted the right to trade under the franchisor’s brand and system. The manner in which the franchise model is implemented is nevertheless capable of infinite variation. It is its capacity for adaptation and innovation which drives its relentless development.

This paper suggests a role for a form of franchising which incorporates only back-of-house elements—the tried, tested and proven systems and procedures which are not directly visible to the customer—and eschews brand and other visible manifestations of a standardised “one-size-fits-all” approach to service provision. It proposes a form of quasi-franchising where brand and related front-of-house features are removed or, at least, significantly reduced. The “franchisee” acquires the right, and the obligation, to use the “franchisor’s” back-of-house system while retaining flexibility for entrepreneurial endeavour in building an idiosyncratic, eclectic and individualised business.

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Notes

  1. 1.

    Branding is a by-product of the requirement of the mid-thirteenth century Assize of Bread and Ale requiring medieval traders to distinguish their goods by marks to enable the identification of the manufacturers of adulterated goods. The unintended consequence was the promotion of branding. Customers began to select particular bakers and brewers whose product they enjoyed on the basis of their direct experience of the distinguishing mark.

  2. 2.

    One of the most successful brand merchants in the world, Nike founder Phil Knight, has expressed Nike’s philosophy in these terms: “For years we thought of ourselves as a production-oriented company meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product. We’ve come around to saying that Nike is a marketing-oriented company, and the product is our most important marketing tool” (Willigan 1992).

  3. 3.

    There are many instances of brands with a soft human face which have touched hearts around the world being exposed for engaging in practices and activities anathema to the type of image built up through the branding exercise, and thus straining or even breaking the trust once established. As uncompromisingly expressed by Klein: “The travels of Nike sneakers have been traced back to the abusive sweatshops of Vietnam, Barbie’s little outfits back to the child labourers of Sumatra, Starbucks’ lattes to the sun-scorched coffee fields of Guatemala, and Shell's oil back to the polluted and impoverished villages of the Niger Delta” (Klein 2002). Beyonce and Lady Gaga are rarely cited in academic papers but their words resonate in this context: “Trust is like a mirror, you can fix it if its broke, but you can still see the crack in that mother fucker’s reflection”. Beyonce and Lady Gaga, lyrics from the song “Telephone”.

  4. 4.

    G Gilder, Life After Television cited in Klein 2002. As noted by Canning “New Age marketers and ad agencies can no longer afford to build pyramids that will withstand the onslaught of change. Now they must be kites, ready to go where the winds of social change take them” (Canning 2010).

  5. 5.

    Lethlean comments that “Starbucks hasn’t worked in Australia the way it has in the rest of the world? Who’s surprised? With such a strong Italian coffee culture in nearly all our cities and towns, backed up by a rapidly emerging—so called third wave—specialist roaster-café scene it gives me a little comfort to know not everybody confuses free wi-fi with a quality coffee experience” (Lethlean 2010).

  6. 6.

    Autobarn, a prominent Australian after-market automotive parts is a franchise system owned by the original members of the buying group. Mitre 10, a prominent hardware chain is a cooperative owned by its members and, apart from ownership, indistinguishable from a franchise system.

  7. 7.

    Because “back-of-house franchising” involves no brand element it falls outside the scope of the definition of franchising in every regulated sector, but it is nevertheless a business venture which may be caught by the prior disclosure provisions of business opportunities regulation such as the US Federal Trade Commission Disclosure Requirements and Prohibitions Concerning Business Opportunities (2007).

  8. 8.

    From the Star Trek TV series which debuted in 1966. The original quote was of course “It’s life Captain, but not life as we know it”.

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Authors and Affiliations

  1. The University of Sydney Business School, The University of Sydney, Sydney, Australia

    Andrew Terry & Cary Di Lernia

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  1. Andrew Terry
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  2. Cary Di Lernia
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Correspondence to Andrew Terry .

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Editors and Affiliations

  1. , Institut für Strategisches Management, Universität Münster, Leonardo-Campus 18, Münster, 48149, Germany

    Thomas Ehrmann

  2. , Department of Management, University of Vienna, Brünner Str. 72, Wien, 1210, Austria

    Josef Windsperger

  3. , Institute of Management of Rennes (IAE), Université de Rennes 1, rue Jean Macé 11, Rennes Cédex 7, 35708, France

    Gérard Cliquet

  4. , Rotterdam School of Management, Erasmus University Rotterdam, Burgemeester Oudlaan 50, Rotterdam, 3062 PA, Netherlands

    George Hendrikse

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Terry, A., Di Lernia, C. (2013). Quasi-Franchising: A New Model for Strategic Business Cooperation. In: Ehrmann, T., Windsperger, J., Cliquet, G., Hendrikse, G. (eds) Network Governance. Contributions to Management Science. Physica, Berlin, Heidelberg. https://doi.org/10.1007/978-3-7908-2867-2_15

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