A study into human and social capital for successful entrepreneurship and franchisees in the fitness industry

The aim of this thesis is to research if the necessary human and social capital for successful entrepreneurship of franchisees differs from those of non-franchisees in the fitness industry. Small and medium-sized enterprises (SMEs) in the fitness industry are dealing with structural pressured margins. Therefore, it is challenging to continually respond to market trends, which are developing faster than before. Franchising could be a solution to help entrepreneurs develop their business models in order to stay competitive. In the first part a literature review will be conducted, starting with researching entrepreneurship, human and social capital and entrepreneurial characteristics and success. This research showed that an entrepreneur is someone who recognizes and/ or creates opportunities, is willing to take risk and is able to create a unique profitable business model from this opportunity. With regard to human capital, the higher the level of knowledge, motivation, experience and creativity, the higher the chance of successfully recognizing and realizing opportunities. On the other hand, with regard to social capital, a broader, more diverse and supportive network increases the probability of success of an entrepreneur. Successful entrepreneurship thus consists of both human and social capital. In the second part of this literature review, the definition of franchising, franchise success and the advantages and disadvantages of franchising are identified, followed by a description of the context (the fitness sector). This research showed that the most important factor for a successful franchisee are the personal characteristics. In addition, hard franchising increases the chance of success. Moreover, there are five criteria which determine franchise success. The best way to benefit from franchising is when the franchiser and franchisee work closely together under one recognizable brand name. This thesis is a qualitative based research. Semi-structured interviews are conducted. Several successful independent entrepreneurs and franchisees were interviewed. This will give a reflection of the practical side, followed by an analyses with the within- and cross case method. Finally, a comparison is made between the literature and the interviews. The result of this thesis shows that in order to be a successful independent entrepreneur or a successful franchisee, the human and social capital not necessarily differ. For both entrepreneurs and franchisees the the social skill is very important as well as previous success, being persuasive and fit. On the other hand, there are also differences, such as the educational level and choice of study, the experience with finance and the degree of being innovative. However, the research showed that these are not necessary factors for being successful in the fitness industry. Furthermore, in order to get more scientific and generalized result a more extensive research with more interviews in different industries is an option.