Franchising and Entrepreneurship; match or mismatch?

Traditional franchise literature argues that franchising and entrepreneurship do not match; standardization of the business format is the raison d'être of franchising as a phenomenon. More recently, arguments arise that entrepreneurship and franchise do match, since local adaptation of the business format would improve the business performance of the franchised unit. However, little is known about actual entrepreneurial behavior of franchisees. Since franchisees exhibit characteristics of both independent and corporate entrepreneurs, we combine various literature streams to develop and test hypotheses on the antecedents and consequences of entrepreneurial franchisee behavior. The results show that franchisees engage in considerable entrepreneurial behavior. The extent of entrepreneurial franchisee behavior is mainly related to franchisees’ intrinsic motivations, relational satisfaction and local competition. Entrepreneurial franchisee behavior has only a slight positive impact on unit performance, but leads to considerable variation in unit performance. This variation may be an important source for longer term business format renewal.