Replicate or adapt? Franchising and organizational routines

The purpose of this paper is to introduce strategy as a factor that explains when franchisors – through the franchisees they select – seek to replicate routines exactly versus allow local adaptation of routines.

Combined archival and survey data from 248 US and Canadian franchisors actively seeking franchisees were used to test hypotheses via structural equation modeling. The robustness of results was comprehensively explored.

As hypothesized, results suggest that franchisors pursuing plural form strategies select franchisees with traits that foster replication, such as prior managerial experience and the desire to become multi-outlet franchisees. Those franchisors pursuing turnkey strategies seek franchisees who exhibit a willingness to experiment and adapt. In contrast to expectations, plural form franchisors were more likely to seek franchisees with local market knowledge.

Strategy influences whether franchisors select franchisees who will replicate versus adapt organizational routines. The authors introduce strategy as a factor affecting the extent to which routines are replicated exactly versus adapted locally. For franchising research, they challenge prior theory by explaining why franchisors invest in franchisee selection rather than waiting for the best franchisees to self-select into franchising.