| Summary: | Franchising plays a crucial role to the growth of emerging economies like South Africa. It brings together two entrepreneurs with individual goals of wealth creation to work together as franchisor and franchisee. However, this relationship is susceptible to risks such as free-riding and opportunism by both parties due to their sometimes-diverging interests in business. Exploring perceptions of trust in franchisor franchisee relationships inspired this study, which is an extract from a masters’ dissertation. The agency, leader member exchange and resource scarcity theories and related literature were used to
investigate perceptions of franchisors and franchisees respectively, network success and the role of trust in the franchise relationship. The study found that while the franchise agreement provides guidelines on expected conduct and remedies to challenges that may arise, it sometimes becomes the source of conflict. Despite, the balance of power seemingly weighing in favour of the franchisor, franchisees buy into franchises trusting that the franchisor will act in good faith and in the best interest
of the whole network. Perceived franchisor trustworthiness, approachability and openness to
communication enhance franchisee positive attitude, cooperation and brand loyalty. The study, therefore, concludes that trust is a determining factor in the success, performance and sustainability of franchises. Theoretically, this study contributes to existing literature on franchising and may be used to guide future research. Future studies may be on the cost of non-compliance, sabotage or litigation in relation to benefits of a culture of trust and honesty in franchise relationships. The practical contribution of the study is that it suggests possible ways of improving trust in franchise relationships.
|
|---|
