Despite the common perception that franchising and entrepreneurship are very separate domains, recent research highlights that franchise systems need to innovate and behave entrepreneurially in increasingly uncertain environments to survive and grow.
Franchising, as an imitative business model, provides a challenging context to create and manage innovation. Franchisees buy into a system that has a standardised format to ensure network consistency. They are typically bound to follow the rules and regulations of the franchisor which limits their innovative and entrepreneurial activities. However, franchisees may overcome these constraints through acts of innovation and “hidden” bricolage.
Drawing on data from two related empirical studies of franchisees operating in the UK, Dr Julienne Senyard from the Department of Business Strategy and Innovation, along with colleagues Anna Watson and Lola Dada, conducted research to understand how franchisees contribute to innovation within their systems.
Their first study revealed that, although many franchisees develop innovations, they are not always adopted by the franchise system, suggesting acts of hidden innovation.
These findings motivated a second, qualitative study. Through a case analysis of 29 franchisees from 7 different franchise systems, they identified a number of organisational and relational factors that influence both franchisee engagement in innovation, and the extent to which their innovations are disclosed to the network.
Developing an innovation culture within the franchise, providing organisational support including autonomy, time to experiment, and strong trusting relationships were critical in developing innovation activities.
Franchisee interviews highlight the role of autonomy:
“It’s always great to have your back per se by the franchiser but then also to be given that freedom as your own business”
The researchers developed a theoretical framework of franchisee-led innovation processes and innovation disclosure, which contribute to the role of social exchange theory in innovation practices within the business context. Their findings extend emerging research on how franchisees innovate in franchising systems., and provides practical insights on how franchisees can be best supported in creating and disclosing innovations to benefit the franchise system.