The franchise’s curse - drivers and barriers of innovation adoption in franchise systems

As technological developments are accelerating, it becomes increasingly important for companies to innovate faster than ever before. For most franchise organizations, this can be a real challenge. Primarily because franchising involves the frequent replication of a business model. As a result, franchise systems have a strong focus on operational activities, and less attention is paid to exploratory activities from which innovations can emerge. Consequently, innovation in franchise systems is often hampered. There is however, little literature on how the development and adoption of innovations can be promoted in franchise systems. This thesis makes a contribution by providing an answer to this question. This was done by means of a benchmark analysis that compared two, in terms of innovativeness, opposite retrospective case studies. Subsequently, several best practices, promoting the development and adoption of innovation were formulated. The results indicate that franchise organizations should consider innovating according to a coupled innovation process since this could restore the imbalance between exploitation and exploration activities. Additionally, franchise organizations that aspire to be innovative should develop the hard and soft side of innovation, as building and nurturing an innovative organization requires both. Finally, the adoption of innovations can be accelerated by limiting the involvement of franchisees in the innovation adoption process. There are however a couple of prerequisites that should be taken into account when limiting the involvement of franchisees. First of all, the stake that franchisees have in the franchise should be kept to a minimum in order to minimize the power franchisees can exercise. Secondly, the franchisor should own a decent amount of distribution outlets for the development and testing of innovations, as well as to build trust among its franchisees. Trust levels can be further increased by appointing ex-franchisees in key executive positions. Third, franchise organizations should consider facilitating enterprising franchisees as they can accelerate the Innovation in franchise systems: best practices promoting the development and adoption of innovations 4 development of incremental innovations, and as shown by this research, can convince franchisees of adopting innovations.