From franchisee experience to customer experience: their effects on franchisee performance

Journal of the Academy of Marketing Science · 2021 · Volume 49 · Issue 6

Abstract

Despite the importance of experience, the question of whether and how a franchisee’s operating experience affects performance remains undertheorized. Taking a multi-unit franchisee owner’s perspective, we unravel the performance effect of an owner’s operating experience. We theorize on the differential effects of three facets of this experience:local experience,intensity of distant experience, andheterogeneity of distant experience. Bringing customers into franchising research, we propose customer satisfaction as a key intervening mechanism and customer diversity as a key contextual condition for the performance effect of an owner’s operating experience. An analysis of 14,069 stores in the McDonald’s chain over three years and of more than six million customer reviews shows that an owner’s greaterlocalexperience and higherheterogeneityof distant experience improve, whereas higherintensityof distant experience impairs, store survival and sales growth through customer satisfaction. Those performance effects are moderated by the extent of customer diversity.

Keywords

Multi-unit franchising, Franchisee experience, Customer satisfaction, Customer diversity, Sales growth, Store closing

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