Abstract

Alongside business practices, the franchisor’s brand is one of the two basic constituents of the franchise package that the franchisees buy into, and one of the major resources that franchisees seek when engaging in a franchise agreement. This paper addresses the value added by the brand to the franchise package from the franchisees’ perspective by considering (a) the sources of this added value and (b) its impact on franchisees’ intentions and behaviors. Based on previous literature on how brands generate value for consumers and firms, we first extend the concept of brand equity to franchising and propose a theoretical framework of the sources and outcomes of franchisee-based brand equity. We then explore franchisees’ perspective on the brand’s added value by conducting sixteen interviews with franchisees in France. The interviews combined with previous literature reveal that franchisees consider that the brand adds value directly by offering them functional, symbolic, experiential, economic and relational benefits, as well as indirectly by driving positive responses from consumers, employees and financial partners toward the branded franchised unit. Surprisingly, the symbolic benefits emerge as the strongest direct benefits. In turn, this added value attracts franchisees to enter the network, motivates their intention to continue in the franchise relationship and acts as a palliative for organizational problems encountered by franchisees. These findings indicate that franchisors should strongly integrate the brand in their value proposition in order to drive positive responses from their potential and current franchisees.

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