Roles in Franchising: Agency and Stakeholder Theory Perspectives

Abstract: Although the causes of conflict in networks and interorganizational relationships have long been investigated, scholars have overlooked the importance of stakeholders with multiple roles in eliciting managerial (mis)perceptions and potential for conflict. We find that franchisees take on multiple stakeholder roles, as customers, employees, investors, and business partners. Drawing from agency and stakeholder theories, we empirically demonstrate that the franchisor’s perception of franchisees’ multiple stakeholder roles affects managerial support and conflict outcomes in franchisor-franchisee relationships. The primary data support our claims that when franchisees are viewed as investors and business partners, franchisors increase the level of support offered and franchise systems experience less conflict.