Murray, B and Smyth, H (2009) Barriers to franchise initiation for general contractors in US remodeling industry: A non-franchisor perspective. In: Dainty, A R J (ed.) Proceedings of 25th Annual ARCOM Conference, 7-9 September 2009, Nottingham, UK.
Abstract
As the US homebuilding industry moves toward greater consolidation and concentration, residential remodelers remain highly fragmented and becoming increasingly more disaggregated into specialty trades and sectors. The result is remodelers have a diminished bargaining position against more consolidated segments and are susceptible to market risk since they traditionally service geographically specific markets. Theory would suggest that franchising may be a useful competitive business strategy to parallel consolidation in other segments. Research conducted in 2008 shows a small population of remodeling franchises listed in the US. The vast majority of these franchises were in specialty trades and only one general remodeling franchise was represented. This paper investigates the barriers to franchising in practice for general contractors in the US remodeling industry. The applicability of economic theories used to describe why firms franchise is evaluated against secondary quantitative data and extant literature. Interviews were conducted amongst non-franchising, general remodelers who conceptually are classified as potential franchisors . Two principal findings emerge. Human capital requirements are found to be a primary perceptual barrier to franchise initiation. A second and somewhat unexpected finding is the perceptual barrier amongst key decision-makers in founder-controlled firms. The analysis reflects upon this finding by introducing upper-echelon theory and ultimately suggests that as the profile of company owner s change, the perceptual barrier to franchising may be of lesser significance.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | barriers of entry; franchising; general contractor; remodeling |
| Index terms: | economic theory, competitive busines, interview, bargaining, human capital, population, becoming, markets, strategy, owner, general contractor |
| Subjects: | data collection methods, economics, demography, practitioner, sociology, philosophical process, business management, economic analysis, management |
| Topics: | Supply Chain Management, Business Strategy, Urban Studies, Roles and Professions, Research Practice, Stakeholder Management, Organizational Design |
| Descriptive scope: | 3 PCE |
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