European Commission regulation, its consequences on practices, conflicts and performance in franchising: a multidisciplinary and international approach – FRANBLE

This research program aims to examine and assess the impact of the Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices and its Guidelines on Vertical Restraints - Text with EEA relevance - 2010/C 130/01, on practices, conflicts and performance within franchise networks, using a multidisciplinary and international approach. In fact, franchising is “a contractual agreement between two legally independent firms in which one firm, the franchisee, pays the other firm, the franchisor, for the right to sell the franchisor’s product and/or the right to use its trademarks and business format in a given location for a specified period of time” (Blair & Lafontaine, 2005, p. 3).
Due to the benefits stemming from know-how and brand name, and the associated reduction of risks, franchising has been growing for the last 30 years. There are more than 2.5 million franchised units worldwide (European Franchise Federation, 2010). For instance, in the US, there are 2,200 franchise networks including 784,802 franchised units, generating 7.8 million jobs and 739.9 billion dollars of turnover (PricewaterhouseCoopers, 2011). In Europe as well, franchising is particularly developed with about 400,000 franchised units. In France, there are 1,477 franchisors and 58,351 franchised units, employing 335,000 persons and generating more than 47.88 billion euros of turnover (French Franchise Federation, 2011). All these figures highlight the importance of franchising in terms of economy and employment.
As the number of franchise networks has been constantly increasing, the number of franchisor/franchisee conflicts has been increasing as well, whatever the industry (retailing & services) and whatever the country (e.g., Frazer & Winzar, 2005). Indeed, franchisors and franchisees are both entrepreneurs who work under a same brand. They want to achieve a higher performance, but their objectives and means can vary and conflicts can then emerge.
We consider that the regulation itself and its guidelines can influence the practices of franchisors and franchisees; the sources, scope, types and modes of resolution of conflicts; as well as the performance of the franchise networks. We will focus on know-how, E-commerce and resale price that are three key elements of franchising particularly concerned by this new Regulation.
This research program will involve a multidisciplinary approach (Business, Law & Economics), with additional insights from Sociology of Conflicts as well, in order to get a global understanding of conflicts and performance within franchising. Besides, this research program has an international dimension. We will benefit from external feedback on European Commission regulation from Australian and US franchising scholars. The exploratory study will be run at the European level (France, Germany, Spain and the UK) in order to have a broader perspective on the research questions. The core focus of this research program, i.e., the empirical studies dealing with franchising, conflicts and performance in link with know-how, E-commerce and resale price, will be conducted in the French market.
The methodology for these empirical studies will be qualitative and quantitative, and multi-level oriented (franchising experts, franchisors, franchisees and customers). The detailed literature review, the managerial, legal and economic monitoring along with the different empirical studies will lead to research contributions, managerial implications for franchisors and franchisees, as well as policy implications.