Jonathan Piccolo De Lima
Master's – Multi-unit franchisees: opportunities and challenges in the fashion and apparel sectors in Brazil
Advisor: Prof. Dr. Luiz Nelson G. de Carvalho
Comission: Profs. Drs. Silvia Pereira de Castro Casa Nova, Eugenio José Silva Bitti and Juracy Gomes Parente
Class: 217, FEA-5
Franchising is becoming more and more socially and economically relevant in Brazil and in the world. Despite the multitude of theoretical perspectives employed to explain the phenomenon, one of its dimensions is still underexplored: multi-unit franchisees. Most studies focus on single-unit franchisees and the North American context, which leaves critical questions about multi-unit franchisees and different cultural scenarios not adequately answered. In this paper, the theoretical perspective of Organizational Economics has been adopted to analyse the factors that favour the existence of multi-unit franchisees in the fashion and apparel sectors in Brazil. The approach taken is qualitative and is divided into two stages. First, finance and accounting tools were used to assess the viability of investments in the sectors of interest. This served as contextualization for the following stage. Then, template analysis was used to identify, based on the accounts shared by the interviewees, themes that could reveal insights into the phenomenon. Most results support the literature, indicating many advantages and disadvantages associated with the existence of multi-unit franchisees, such as the reduction of free-riding, better-quality information exchange, creation of unique organizational resources, faster learning, higher bargaining power with suppliers, more power in the franchisor-franchisee relationship, better alignment of interests with the franchisor, removal from the operations, higher capacity to resist changes and reintroduction of a few agency problems into the franchising system. Thus, the results indicate that theoretical conjectures apply to the Brazilian context. They also bring contributions to underdiscussed aspects of the literature, such as the effects of controlling franchised outlets from different brands and sectors on the risk profile of multi-unit franchisees. Furthermore, the results bring a unique contribution to the franchising literature as they discuss the Simples Nacional issue – a tax regime specific to the Brazilian context that has considerable impacts not only on multi-unit franchisees, but also on the franchise business model in the country. The study brings practical implications to franchisors and franchisees, as they’re are able to assess the opportunities and challenges associated with multi-unit franchisees, as well as implications to legislators, who can understand the effects Simples Nacional has on the franchise market.
*Abstract provided by the author