When does ownership concentration improve franchise store performance?

When does ownership concentration improve franchise store performance?
Pushpinder Gill, Stephen K. Kim, Preetinder Kaur
European Journal of Marketing, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to examine the performance outcomes of a store’s ownership concentration within a multi-unit franchise (MUF) network, emphasizing the nuanced effects under varying competitive conditions.

This study conducted a comprehensive analysis of all stores within the McDonald’s chain over an eight-year span. The research methodology incorporated a review of over 11 million customer evaluations to discern patterns in customer satisfaction and sales growth in relation to the store’s ownership concentration.

Stores with a pronounced ownership concentration showcased enhanced outcomes in both customer satisfaction and sales growth. However, the magnitude of these effects was moderated by the nature of competitive conditions, specifically focal market competition, non-focal market competition and legal safeguards.

The study’s concentration on McDonald’s stores introduces a specificity that might limit the universal applicability of the findings to all franchise models or sectors. Additionally, the emphasis on the store level of analysis potentially overlooks broader systemic factors.

For managers and franchise owners, understanding the nuanced roles of ownership concentration can provide strategic insights. Recognizing how different competitive conditions can moderate the effects of ownership concentration can help in making informed decisions about power dynamics and competitive positioning.

A store’s ownership concentration can have broader societal ramifications, potentially shaping consumer perceptions, community engagement and overall market health. As an owner’s stores concentrate spatially, they can contribute to a healthier market ecosystem, benefitting consumers and communities alike.

While the vertical power between the franchisor and franchisee owners have been studied, this study extends the discourse to power between MUF owners. This study provides novel insights by showing customer centric and firm centric performance outcomes of ownership concentration.

​This study aims to examine the performance outcomes of a store’s ownership concentration within a multi-unit franchise (MUF) network, emphasizing the nuanced effects under varying competitive conditions. This study conducted a comprehensive analysis of all stores within the McDonald’s chain over an eight-year span. The research methodology incorporated a review of over 11 million customer evaluations to discern patterns in customer satisfaction and sales growth in relation to the store’s ownership concentration. Stores with a pronounced ownership concentration showcased enhanced outcomes in both customer satisfaction and sales growth. However, the magnitude of these effects was moderated by the nature of competitive conditions, specifically focal market competition, non-focal market competition and legal safeguards. The study’s concentration on McDonald’s stores introduces a specificity that might limit the universal applicability of the findings to all franchise models or sectors. Additionally, the emphasis on the store level of analysis potentially overlooks broader systemic factors. For managers and franchise owners, understanding the nuanced roles of ownership concentration can provide strategic insights. Recognizing how different competitive conditions can moderate the effects of ownership concentration can help in making informed decisions about power dynamics and competitive positioning. A store’s ownership concentration can have broader societal ramifications, potentially shaping consumer perceptions, community engagement and overall market health. As an owner’s stores concentrate spatially, they can contribute to a healthier market ecosystem, benefitting consumers and communities alike. While the vertical power between the franchisor and franchisee owners have been studied, this study extends the discourse to power between MUF owners. This study provides novel insights by showing customer centric and firm centric performance outcomes of ownership concentration. Read More