Are the parents to blame? Predicting franchisee failure

Purpose – The purpose of this study is to show how franchisor characteristics influence franchisee failure. To achieve this aim, we developed a heuristic model using the methodology and power of predictive analytics. Design/methodology/approach – The authors use data from the World Franchising Counc...

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Veröffentlicht in:Competitiveness review 2015-01, Vol.25 (2), p.205-217
Hauptverfasser: Alon, Ilan, Boulanger, Michèle, Misati, Everlyne, Madanoglu, Melih
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container_end_page 217
container_issue 2
container_start_page 205
container_title Competitiveness review
container_volume 25
creator Alon, Ilan
Boulanger, Michèle
Misati, Everlyne
Madanoglu, Melih
description Purpose – The purpose of this study is to show how franchisor characteristics influence franchisee failure. To achieve this aim, we developed a heuristic model using the methodology and power of predictive analytics. Design/methodology/approach – The authors use data from the World Franchising Council’s and from the Small Business Administration (SBA). The data cover 271 diverse USA franchise chains that are present in both databases. Findings – The model predicts potential defaults of SBA-backed loans issued to American franchisees, and the authors identify 13 variables that help explain franchisee failure. Practical implications – The authors offer guidance for stakeholder groups – lenders, franchisors and franchisees – to minimize the risk of lending and business failure. Originality/value – The paper contributes to the franchising literature by considering parent firms’ characteristics to predict franchisee failure.
doi_str_mv 10.1108/CR-10-2014-0034
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source Emerald A-Z Current Journals
subjects Business plans
Corporate profits
Credit scoring
Debt financing
Earnings
Economic growth
Equity financing
Failure
Franchisees
Franchising
Innovations
Marketing
Predictive analytics
Product differentiation
Royalties
Small business loans
title Are the parents to blame? Predicting franchisee failure
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