Channel Changes: An Examination of Ownership Change in Franchise Firms

In a system whose underpinnings are standardization and consistency, change can be disruptive and detrimental to its members. Arguably, one of the more important changes that can take place in a franchise is a change in ownership. Although franchise agreements typically cover a 10-to 20-year period, not all franchisees maintain their ownership throughout the term of their agreement. Some franchisees sell their businesses, while a number of franchisees acquire additional outlets. The impact of ownership change in franchise systems is not well understood, and the question of what happens when franchises change ownership remains largely unanswered. This study examines change of ownership in franchise systems. Case studies of two franchisees are presented: One franchisee who acquired a second franchise, and another who sold her business two and one-half years after purchasing it. In both cases, positive outcomeswere realized for both the current and the former franchisees. Increased sales under the new owners suggest that these changes in ownership also provided benefits to the franchisor. (C) 200 by The Haworth Press. All rights reserved.