A Study Beyond Borders – Portugal/Spain
3.3 Methodology
3.3.2 Phases of the Study
As we have already mentioned earlier, this study was conducted in two phases: The fi rst one took place between 2004 and 2008, where we did an analysis of the Iberian market in terms of franchising and a second phase running from 2008 to 2012 where a case study of the health and wellness sector, with Iberian based business.
Phase 1: Characteristics of the Sample. In the fi rst phase of the study were ana- lyzed sectors of franchising Portuguese and Spanish from 2004 to 2008. To obtain the data questioned marketing managers and sales representatives of eight compa- nies belonging to Spanish and Portuguese franchising. Using these interviews and all available documentation, developed a draft questionnaire that was tested in three marketing managers and sales. This initial questionnaire was administered person- ally and later improved, based on feedback received. Then revised the questionnaire
Table 3.1 Descriptive statistics and correlation coeffi cients Growth in sales per outlet (%) % of outlets discontinued Territorial exclusivity Misalignment Initial investment required (×100,000 €)* level of specifi c investments
Free- rideable services Chain size Chain age GRP (%) Mean 7.49 4.12 0.71 0.17 3.25 5.31 34.62 8.92 3.29 S.D. 9.26 1.35 0.46 0.35 1.96 2.69 32.11 7.86 1.09 Growth in sales per outlet −0.315* 0.168* −0.201* 0.096 0.084 0.089 0.054 0.281* % of outlets discontinued −0.279* 0.182* −0.103 −0.033 −0.249* −0.164* 0.177* Territorial exclusivity 0.033 0.229* 0.307* −0.133* 0.004 −0.004 Misalignment −0.055 −0.018 −0.081 −0.063 −0.031 Initial investment required*Level of specifi c investments
−0.067 0.082 0.026 0.058 Free-rideable services −0.004 0.072 −0.031 Chain size 0.121 0.045 Chain age −0.014 Note: *Correlation statistically signifi cant at 5 % level
Table 3.2 Probit estimates for exclusivity choice (1 = adoption of territorial exclusivity;
0 = otherwise) Independent variables
Initial investment required*Level of specifi c investments 0.82*** 0.67***
Free-rideable services 0.77*** 0.63**
Chain size −0.64** −0.79*
Chain age 0.08 0.19
Sector fi xed effects NO YES
Observations 145 102
Pseudo R2 0.39 0.46
Notes: Two-tailed tests
† p <0.10; * p <0.05; ** p <0.01; *** p <0.001
Table 3.3 Effects of territorial exclusivity on the performance outcomes Growth in sales
per outlet
Growth in sales per outlet
% of outlets discontinued
% of outlets discontinued
(1) (2) (3) (4)
Territorial exclusivity 1.830*** 1.710** −1.234*** −1.135**
Chain size 0.005 0.009 −0.019** −0.028*
Chain age −0.009 −0.017 −0.092* −0.131*
GRP 0.715*** 0.631*** −0.226*** −0.285***
Sector fi xed effects NO YES NO YES
Constant 3.75** 3.49* 7.22*** 7.61**
Observations 145 102 145 102
Wald chi 2 62.326 74.631 79.362 90.324
Notes: Specifi cations that do not account for self-selection of the exclusivity decision. Two-tailed tests † p <0.10; * p <0.05; ** p <0.01; *** p <0.001
Table 3.4 Effects of territorial exclusivity on the performance outcomes Growth in sales
per outlet
Growth in sales per outlet
% of outlets discontinued
% of outlets discontinued
(1) (2) (3) (4)
Territorial exclusivity
0.624 0.798 −0.427 −0.386
Lambda 1.096*** 0.885** −0.851*** −0.731**
Chain size 0.002 0.001 −0.014** −0.021*
Chain age −0.012 −0.007 −0.069* −0.048*
GRP 0.602*** 0.463*** −0.234*** −0.176***
Sector fi xed effects NO YES NO YES
Constant 4.44** 3.22* 6.80** 7.29*
Observations 145 102 145 102
Wald chi 2 72.619 78.142 86.539 97.321
Notes: Specifi cations that do account for self-selection of the exclusivity decision. Two-tailed tests † p <0.10; * p <0.05; ** p <0.01; *** p <0.001
to a new set of 20 managers in marketing and sales of franchise systems which served to fi x a set of remaining ambiguity was applied. Finally, the survey was con- ducted via email. Sending the questionnaire via e-mail so it seemed the most appro- priate one since, according to Campbell ( 1955 ) the appropriate criteria are those that serve to place individuals who are knowledgeable about the phenomenon, and will- ing to talk, both are able to communicate with the researcher on the phenomenon under study. When organizations are contacted by us as a franchisor, by phone, in order to locate a person within the company with the knowledge and the necessary motivation, immediately generates an adverse reaction to not provide information Seidler ( 1974 ). In most cases, formal titles of potential communication channels, were driving sales or marketing managers, and it was there that stemmed restric- tions (Armstrong and Overton 1977 , pp. 396–402).
Questionnaires to these potential informants were sent, with all members of a population of 726 franchising chains identifi ed in Tormo&Asociados and Guides Franchising. A total of 175 companies (24 %) responded, 30 of these responses have been destroyed due to the lack of any data. 145 responses (Table 3.7 , attached)
Table 3.5 Effect of misalignment in exclusivity decision on the growth in sales per outlet Chains with territorial exclusivity Chains without territorial exclusivity Growth in sales
per outlet
Growth in sales per outlet
Growth in sales per outlet
Growth in sales per outlet
Chain size 0.003 0.006 −0.002 −0.005
Chain age −0.019 −0.031 −0.032 −0.028
GRP 0.682*** 0.489** 0.456* 0.634†
Sector fi xed effects NO YES NO YES
Lambda −1.006** −0.814* −0.633* −0.552†
Constant 6.214** 5.526** 5.195* 7.624†
Observations 103 70 42 32
Wald chi 2 34.96 40.22 12.07 14.27
Notes: Two-tailed tests
† p <0.10; * p <0.05; ** p <0.01; *** p <0.001
Table 3.6 Effect of misalignment in exclusivity decision on the proportion of outlets discontinued Chains with territorial exclusivity Chains without territorial exclusivity % of outlets
discontinued
% of outlets discontinued
% of outlets discontinued
% of outlets discontinued
Chain size −0.027* −0.035† −0.041† −0.019
Chain age −0.107† −0.086 −0.178 −0.139
GRP −0.163*** −0.217** −0.243** −0.174†
Sector fi xed effects NO YES NO YES
Lambda −0.734** −0.630* −0.524* −0.453†
Constant 6.812*** 6.968** 7.642* 7.868†
Observations 103 70 42 32
Wald chi 2 38.67 46.18 14.43 17.24
Notes: Two-tailed tests
† p <0.10; * p <0.05; ** p <0.01; *** p <0.001
were used in the study. The sectors represented in the sample were compared with the existing population. The sample and the population do not seem to differ by sector.
An analysis was also made to the fi rst respondents (fi rst half) with the second respon- dents (second half) following the procedure Overton and Armstrong (1977). No sig- nifi cant differences were found between the scores of the fi rst and respondents’
seconds. An additional approach to assess the impact of non-response was compared
Table 3.7 Distribution of sample chains by sector
Sector Number of franchise chains Sample %
Adventure 1 0.69
Automobile services 6 4.13
Beauty and personal hygiene 4 2.75
Cafés & ice-cream 4 2.75
Ceramic surfaces 1 0.69
Cleaning-interior restoration 1 0.69
Clothing-fashion 16 11.03
Computers 4 2.75
Consulting fi rms 6 4.13
Cosmetics 5 3.45
Drugstore 3 2.06
Dry-cleaning 6 4.13
Food and bakery 3 2.06
Furniture and decoration 4 2.75
Hairdresser’s 1 0.69
Herbalist’s 2 1.38
Jewelry and costume jewelry 3 2.06
Leisure 2 1.38
Lingerie and notions 3 2.06
Offi ce-stationer’s 2 1.38
Personalized editions 3 2.06
Photography 1 0.69
Printing and signs 2 1.38
Real estate agencies 5 3.45
Restaurants 19 13.10
Specialized products 3 2.06
Specialized services 7 4.83
Specialized shops 6 4.13
Sports 2 1.38
Teaching 6 4.13
Telephone stores 2 1.38
Textiles 2 1.38
Transport services 3 2.06
Travel 4 2.75
Vending 3 2.06
Total 145
Note: The sample consists of 145 business format franchising networks from 2006. Sectors with three or less observations are marked in italics
with the characteristics of the population surveyed. We also made a comparison between the age of franchising, the average investment, the number of stores owned by the company (owned units) and franchised units, franchise network, the size in terms of total number of establishments and franchise fees (royalties and advertis- ing). These did not reveal a statistically signifi cant ( p >0.05) between the two groups for all variables, except for the average investment (in this case, the test revealed no statistically signifi cant differences at 10 %), increasing confi dence in generalizes the results for systems of franchising operating in Portugal and Spain.
Phase 2: Study of Network Health and Welfare. This phase aimed, as already mentioned, to investigate and understand some elements concerning the role of franchising networks among franchisees that are in a network that facilitates the multifranchising and territorial exclusivity. We sought to effect a network that were part of the sample observed by us between 2006 and 2008. Selected The network belongs to the Health and Welfare Sector. (1) What do you think of franchisees franchising networks: to facilitate the achievement of this objective, interviews, semi-structured, to all franchisees of the network, which contained three questions of delimitation of the research, were performed? (2) What is the importance of ter- ritorial exclusivity and multifranchising? And (3) what are expectations about its use in support by the franchisor?
Like any other professional Franchisee leverages his knowledge to put into prac- tice in their daily lives. So, the speeches analyzed allowed us to understand the ele- ments that constitute the underlying features of the concept of network and multifranchising. Three sections contextualize the types of categories and their respective subcategories, in order to analyze all the contents, fundamental, obtained through the interviews were prepared. We analyze the “thinking on the internation- alization of franchising” (Rondan et al. 2012 ), participation in the network and, fi nally, the expectations on the use of networks in depth franchising.