Surinder Tikoo

A channel leader often has to influence the behavior of its channel partners to govern the channel effectively. To achieve that end, a channel member may exert influence through persuasive communication directed at its channel partners. But, of the many forms of influence, which will be used? The different influence strategies range widely from simple information exchange, and recommendations, to promises, requests, threats, and legalistic pleas.

In this research report, we examine franchiser influence choices in the important, but hitherto unexplored, business format franchise channel. This aspect of franchiser behavior is important because its affects the character of the franchise channel relationship. We propose that a franchiser's use of the different influence strategies is shaped by the extent of franchisee dependence. We further argue that franchisee dependence on the franchiser changes over time; as franchisees gain business experience they are likely to become less dependent on their franchiser. Critically, this requires the franchiser to adapt the use of different influence strategies as franchisees gain experience and independence. In particular, we conclude that a franchiser is likely to rely more on non-coercive forms of influence to coordinate franchisees early in their business development. However, the franchiser will make frequent use of coercive influence to coordinate less dependent experienced franchisees that evolve over time.

We test these propositions using data obtained from a survey of franchisees of a packaging, mailing, and business service franchise system. The results indicate that franchiser use of requests, threats, and legalistic pleas increases and the use of recommendations decreases as franchisees become more independent. The finding regarding the use of recommendations is particularly interesting. It suggests that the franchiser does not find recommendations to be as effective for coordinating less dependent franchisees as it does for dependent franchisees. It also suggests that as a franchiser increases its use of other forms of influence, it does not rely as much on recommendations to obtain franchisee cooperation. Of particular interest is that franchiser use of promises and information exchange does not apparently vary with franchisee dependence.

We find that franchisee dependence is significantly related to franchisee experience, and franchiser experience is significantly related to franchiser use of recommendations, threats, and legalistic pleas. We show that the effect of franchisee experience on the use of these three influence strategies operates through the intervening effect of franchisee dependence.

Finally, we show that overall a franchiser employs two combinations of the six influence strategies. In one combination associated with greater franchisee independence, the franchiser uses recommendations more frequently and requests, threats, and legalistic reliance less frequently than it does in the other. To the extent that the greater use of requests, threats, and legal requirements lead to more explicit conflict in a channel system, the maintenance of a high level of dependence by other techniques may be a key factor in the maintenance of control and a coordinated channel.

More generally, these findings indicate that channel leaders must tailor their communication strategies with regard to the specific state of development of each of their partners. This is likely to be a particularly challenging task for the management of rapidly growing franchise systems, since a high degree of differentiation is likely to exist among the franchisees of such organizations. There will be a continuing stream of novice franchisees coming aboard, most of whom will have little prior general business experience and none within the context of the specific system. At the same time, there will be old-timers who have grown up within the system and may well regard themselves as experts in the management of their businesses. The presence of such divergent franchisees means that diverse strategies will have to be employed in order to accomplish franchiser ends. This further implies that the task of training franchiser representatives will also be challenging since program implementation will require the design of unique approaches with respect to each system member. If the members of the franchise system are particularly close knit, the challenge will be especially strong.

A further implication of these findings is that franchisers should continuously monitor the state of dependence of each of their franchisees as well as maintaining an understanding of the state for the entire system. Ideally, the franchiser should seek to identify innovative programmatic decisions that will continuously challenge the skills and capabilities of its franchisees, to make it clear that their success rests upon following the design developed and promoted by the franchiser.

However, if the potential for innovation in each type of franchise system gradually diminishes with age, this is likely to result in a need for franchiser management to alter the methods employed to coordinate the system and perhaps even to allow a greater degree of franchisee discretion. It seems likely that franchise system founders that continuously employ the same systems for control that were successful at the start will gradually encounter increasing difficulties in coordination. The unexpected difficulties encountered by some franchise systems once they have achieved a high degree of maturity may, in part, be traced to a failure to alter the strategies employed to coordinate franchisee or to change the level of control required to manage.