Multiple control strategies and franchisor performance: Performance effects of authoritative, contractual, and relational control mechanisms

The purpose of this study is to empirically evaluate the direct and interaction effects of formal and relational control mechanisms on franchisor performance. The causes of performance in franchise networks have been overlooked. Therefore, this article juxtaposes the influence of authoritative, contractual, and relational mechanisms on network performance depending on whether franchisors participate in unilateral or mutual decision making with their franchisees. Using primary data from Germany and Switzerland, it is found that both mechanisms of contractual and relational control enhance the profitability and efficiency of franchise networks either when used individually or in combination, while authoritative control diminishes performance, and that its negative performance effect is strengthened with more contractual control, but positively moderated by relational control.