Impact of brand‐building activities and retailer‐based brand equity on retailer brand communities

Purpose – Retailer brand communities exist between a franchisor brand and individual retailers, with retailer‐based brand equity and brand‐building activities being key drivers of their success. This paper aims to introduce retailer‐based brand equity and examine its relationship with brand‐building activities and retailer brand community. Design/methodology/approach – Individual stores in a variable format franchise from the retail hardware industry were studied at annual conventions in two North American cities. Hypotheses were tested using structural equation modeling and regression. Findings – Results show that retailer‐based brand equity mediates the relationship between brand‐building activities and brand community identification and demonstrates the importance of branding in retailing contexts. The franchisee's continuation as part of the retailer brand community is influenced by the retailer‐based brand equity, with increased identification leading to increased purchase and higher performance. Research limitations/implications – The practical demands of the field study constrained the ability to examine other issues relevant to this research. There is also need to develop and refine further the items that measure the relationships. Practical implications – Increased brand‐building activities do not automatically translate into higher commitment by franchisees, and franchisors need to increase the value of the brand. Engaging the franchisee as a member of the brand community has important outcomes for both parties. While franchisor brands benefit through increased sales, franchisees benefit through increased profit. Originality/value – This is the first paper that has applied brand community principles to understand the franchisor‐franchisee relationship. The results from a field study have important implications for both brand building and franchising areas.