Franchising as a strategic marketing plan for small Entrepreneurs: a test case of the real estate brokerage industry

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Abstract

Franchising is normally viewed as a governance mechanism and/or a distribution medium. Most of the existing literature on franchising takes the view of the parent corporation (Franchisor) in order to explain behavior from the corporate level. Measures used in many studies are firm level performance metrics which capture profitability and efficiency. In this paper, I attempt to find if there are differences between franchised firms and independent firms in the residential real estate brokerage industry. In essence, franchising in a fragmented industry such as real estate brokerage is an attempt at a strategic marketing plan. This plan includes a branding element which can be an important motivator to franchise. I find, in a sample of 158 real estate transactions, that there are no differences between the two types of firms by using three statistical techniques-T Test, Regression, and Probit Analysis-and five variables-Listing Agent Type, Days on Market, Original Asking Price, Sale to Asking Price Ratio, and Commission Rate. The results put in doubt the use of franchising for strategic marketing purposes in that independent firms fared as well as franchised firms. These findings have implications for studies in Marketing, Entrepreneurship and Strategy.

Original languageEnglish (US)
Pages (from-to)81-98
Number of pages18
JournalAcademy of Entrepreneurship Journal
Volume15
Issue number1-2
StatePublished - Dec 1 2009

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Economics and Econometrics
  • Strategy and Management

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