Explain how franchisors can enhance franchisee satisfaction Essay

Explain how franchisors can enhance franchisee satisfaction - Essay Example However, firms rely heavily on expansion by a mix of franchising, and company-owned outlets instead of expanding company owned outlets. Explanations are offered by most of the literature in the agency theory. Due to the significance of self-interest for both franchisees and franchisors, franchising is the only best mechanism that motivates both parties for the similar objectives (Huang, 2004). However, there might be unfairness in the franchise contract, and this means agency problems would arise. Therefore, franchisors need to manage and monitor franchisees and ensure the franchisee is satisfied. Thus, the franchisee satisfaction has the greatest predictor on whether a franchisee would recommend their franchisor to the prospective franchisee (Hnuchek, Ismail &Haron, 2013). The paper explains how franchisors can enhance franchisee satisfaction. Franchisees always have expectations of franchisors in the franchise relationship: a high level of independence, support with selection of a distribution point and designing of the distribution point, high standards of potential revenue, training sessions, product and market information, advertising, operational support, and promotional support, support in order to obtain finance, as well as systems for bookkeeping. Therefore, a franchisor needs to ensure that franchisees have a high independence level after joining a franchise as a high level of control by the franchisor exists in franchise systems. In relation to the selection of distribution points, the franchisor needs carry out feasibility studies as well as research in order to ascertain suitable points (Gerhard & De Jager, 2009). In addition, Franchisees expect that geographical rights, exclusively, as protected by the franchise agreement and allocated by franchisors would not allow the franchisor to appoint another franchisee to a certain geographical area that is already