Causes of disruption to franchise operations

Abstract

In this paper, factors that disrupt the operations of a franchisor are examined. Two variables, franchise disputes and franchised outlet conversions, proxy for franchise disruption. This study investigates two possible causes of disruption to the franchise: lack of franchisor support and stage of franchise life cycle. Data obtained from a survey of the population of Australian franchisors in 1998 are analyzed using structural equation modeling (SEM: Amos). The analysis concludes that the provision of support services to franchisees is not a significant cause of system disruption. However, the stage of life cycle development is significant with older and larger franchises experiencing greater levels of disruption.