Franchisee-based brand equity: the role of brand relationship management

Prior research suggests that limited attention has been paid to business-to-business (B2B) branding. Despite compelling evidence that the brand concept is at the very core of franchising success, it is surprising that there is minimal empirical work investigating the importance of the brand in franchising. Further, extant literature suggests that building brand equity is an important strategic issue that can enhance the competitive advantage of retailers. However, despite the increased focus on retail branding, limited attention has been paid to retail brand equity and brand equity within B2B retailing contexts, especially in franchising. As a result, grounded in social exchange, transaction cost, relational equity, competence-based and identity-based brand management views, this study investigates the role of brand relationship management, brand relationship quality, and brand citizenship behaviour in enhancing brand equity in franchise markets. The study explores franchisees’ perceptions of their franchise brands leading to a new model of ‘franchisee-based brand equity’ (FBBE). In particular, the study argues that as a special form of retailing, franchising calls for its own theories other than those applied in other contexts. The study also proposes that the effect of brand relationships on brand equity is moderated by both franchisor-franchisee relationship duration and franchisor competence. Additional analysis is also conducted to examine the effects of brand relationships on FBBE across low vs. high value franchisees and single-unit vs. multi-unit franchisees. To test the franchisee-based brand equity model, the study used both qualitative and quantitative research designs. Initially, exploratory research was undertaken to investigate the research problem and validate the constructs of the proposed conceptual model. To accomplish this, sixteen (16) semi-structured interviews were conducted with franchise experts, particularly franchisees. The main study was then conducted using a quantitative research design and survey data was collected from 352 franchisees Australia-wide selected using a stratified random sampling technique. Structural equation modeling (SEM) procedures were then used to test the hypothesised relationships in the conceptual model and regression techniques were used to test for mediation and moderation effects. Based on the literature review, the qualitative study, and the empirical findings from the quantitative study, a model is advanced that suggests that brand relationship management influences brand relationship quality and brand citizenship behaviour that ultimately enhances FBBE. The study finds that effective management of brand relationships is critical in promoting FBBE. Further, the study confirms that both brand relationship quality and brand citizenship behaviour mediates the relationship between brand relationship management and FBBE. Moreover, moderated mediation analyses indicate that the indirect effect of brand relationship management on FBBE through brand relationship quality is contingent on franchisor competence but not on the duration of the franchisor-franchisee relationship. Conversely, the indirect effect of brand relationship management on FBBE through brand citizenship behaviour is not conditional on either franchisor competence or franchisor-franchisee relationship duration. In addition, the study finds that franchisors play an important role in empowering franchisee brand citizenship behaviour. Moreover, the results show that both franchisor-franchisee relationship duration and franchisor competence do not moderate the relationship between brand citizenship behaviour and FBBE. However, the study partially supports the moderating effects of both franchisor-franchisee relationship duration and franchisor competence on the link between brand relationship quality and FBBE. Lastly, regarding the influence of brand relationships on FBBE, the comparative analyses show no differences between low and high value franchises, while significant differences are apparent between single-unit and multi-unit franchisees. In terms of academic contribution, the study conceptualises, operationalises and empirically investigates the concept of brand relationship management, brand relationship quality and brand citizenship behaviour to advance a novel model of franchisee-based brand equity. In so doing, the current study expands the current understandings of brand equity in B2B markets. Further, the study applies the identity-based brand management view to explain how brand relationships enhance franchisee-based brand equity, thereby extending the application of organisational identity theories to franchising. The study also examines the concept of brand relationships in B2B markets, a concept that has dominated consumer markets. Brand management in franchise channels remains a multifaceted and challenging issue; thus, to managers, this study identifies different roles played by franchise partners in enhancing brand equity. Hence, the study seeks to advise practitioners that brand management in franchise firms should be well-coordinated and integrated between franchisors and franchisees since both play crucial roles. Another important implication for practice relates to the importance of brand relationship management in B2B brand management. Central to the concept of brand relationship management is the notion that negative emotions and feelings towards the brand can negatively influence franchise relationships. Therefore, franchisors are advised to promote a healthy relationship between franchisees and the franchise brand. Moreover, the study seeks to inform managers that brand relationships can be managed at two stages, that is, recruitment and implementation. Franchisors are also advised that ‘age is nothing but just a number’ and need to be cognisant of the ‘dark side’ of long term relationships. Thus, regardless of whether relationships are short or long term, the continuous development of effective brand relationship practices is paramount in enhancing brand equity. Regarding research limitations, the context of the study has been limited to Australia, and for purposes of generalisability, future research may extend the idea in well-established franchise markets such as those in the USA and microfranchising structures in emerging markets such as India. Also, franchising as a freedom-constrained environment might suppress the expression of other brand-related behaviours and further research is needed to explore other un-identified variables that might affect extra-role channel behaviour, in other principal-agent relationships such as employer-employee relationships. Further, the study examined two moderating variables (franchisor-franchisee relationship duration and franchisor competence) and other factors such as brand involvement level, centralisation or decentralisation of authority, competitive intensity or country-of-origin effects could be evaluated. Lastly, the FBBE model is based on franchisees’ perceptions and the inclusion of franchisors’ interpretations is likely to result in a more robust model of franchise brand equity.