Understanding brand within New Zealand franchises

Abstract

Franchising is asserted to be the world’s fastest growing form of retailing. Similar growth is evidenced in Australia and New Zealand. Australia is described as the franchising capital of the world and New Zealand is credited with the highest proportion of franchise systems per capita. Brands are recognised as one of an organisation’s most important assets, as evidenced by the contribution of brands to the intangible asset valuation on the sale of companies. In the New Zealand context it has been asserted that it is impossible to over-emphasise the importance of the brand in franchising. This research is conducted at the nexus of brand and franchising and responds to a research problem in which the instantiated importance of brands to New Zealand franchising is contrasted with the dearth, and possibly absence, of independent research to inform how brands are understood and in which ways this understanding is created and maintained within New Zealand franchises. To address the research problem, an initial research question was expressed and then collapsed into four central research questions which were examined through a review of extant literature. Franchising was addressed etymologically and historically, before assessing the contribution that the three dominant causality theories, (capital scarcity, resource constraint and agency theory) could make to inform the central research questions. Brand was also elaborated from etymological and historical perspectives. It was concluded that the brand component of brand identity best addressed the central research questions which focus on brand within New Zealand franchises and the brand identity prism (Kapferer, 2004) was selected as a template against which brand understanding could be informed and assessed. To determine how this brand understanding is created and maintained, a theory of knowledge creation initiated by Nonaka and Takeuchi (1995) was employed. Examining such an under-researched aspect of franchising resulted in this research being assessed as exploratory which resulted in the adoption of a largely qualitative methodological approach. The qualitative approach responds to the nature of the research questions, the interpretive community with which the researcher identifies and the incompatibility of existing theory with the central research questions. In this qualitative methodology, authenticity was supported by the qualitative referents of credibility, transferability, dependability and confirmability. These referents were thoroughly and specifically operationalised within the research to increase the credibility of its findings. The qualitative referents conditioned data collection, which was facilitated through case-based research in which a sequentially-selected sample of three franchise cases was purposively drawn from a population estimated at 350. Within these cases, three distinct cohorts represented the stratified structure of a franchise. Cohort Fo represented the franchisor stratum, cohort Fe the franchisee stratum and cohort ESOFe that of the customer-contact employee and single-operator franchisee. In-depth semi-structured interviews were conducted with 15 participants in each franchise case. The participants were purposively selected to represent the three cohorts. The data thus collected were complemented and triangulated using document analysis. Data analysis was engaged at three levels of intensity. Classical content analysis was used to code portions of text and these codes were quantitised and presented as coding effects matrices. This provided a visual and arithmetical assessment of the degree to which the research questions were informed by employing two manifest effects, termed occupancy and shading density. The second level of analysis used Key-Words-In-Context (KWIC), while the third used narrative analysis. Data analysis was completed for individual cases, prior to cross-case analysis. The findings from the cross-case analysis were that: • The franchise brand is voiced as important to the success of each of the three franchises researched and each of the three cohorts in each franchise. • The understanding of brand was more naïve than complex and degraded progressively from cohort Fo to cohort Fe to cohort ESOFe. • The franchise brand was managed more as a static entity than the dynamic, evolving entity that extant literature describes. Brand change was episodic rather than continuous. • Heterogeneity of brand understanding was evidenced more than homogeneity, both within and between cohorts. There was limited homogeneity in the expression of the brand essence, which is held to represent the enduring core of the brand. • Articulation and communication processes relating to the franchise brand were found to be stratified, hierarchical, uni-directional and didactic more than representing an active dialogue between internal stakeholders. • The physique facet of the brand was found to be carefully specified and legally protected on franchise initiation. Subsequent brand management was focused on compliance to that specification, to the partial exclusion of other aspects of brand identity management. These six findings led to the expression of an emergent micro-level theory, that proposes that there is a tension, between the typically stratified, hierarchical structure of a franchise, which is exacerbated by the focus of franchisor management on explicit brand knowledge, and the dynamic, evolutionary and context-dependent structure of the brand construct in which tacit knowledge predominates explicit knowledge. The findings in the cross-case analysis were extrapolated to wider populations, resulting in the expression of nine propositions relating to brand in NZ franchises, in all franchises and in all organisations. These propositions supported the statement of the above micro-level theory at a meso-level, referring to all NZ franchises. The research was concluded to make a number of valuable contributions to theory and management practice. These contributions included extending and informing the current debate on the nature of brand and its importance within franchising, at a time of economic stress in which the franchise brand is considered to be a major contributor to franchise strength and survival. The research adds to a research base at the nexus of brand and franchising that was possibly initiated by Pitt, Napoli and van der Merwe (2002), extending it to the New Zealand context, which is under-supplied with independent research on franchising. In supporting praxis the research provides franchise management with a theoretically-supported, 4-step, cyclical process to improve brand understanding. This emergent research also identifies a multitude of future research directions, particularly in refining the method of assessing brand understanding by using theoretically-supported meta-matrices to test the stated meso-level theory, either quantitatively or qualitatively, to determine if franchise organisations exhibit a more sophisticated and homogeneous understanding of brand than non-franchise organisations.