The role of trust in franchise organizations

Purpose – This study aims to examine how two types of trust affect five key franchisee attitudes/behaviors within a setting where franchisees have strong contractual ties to the franchisor. The five attitudes/behaviors are: identification and satisfaction with the franchisor, compliance and non‐compliance with franchisor directives, and perceived relationship quality. These attitudes/behaviors were chosen because research has found each to affect franchise performance. Design/methodology/approach – The model in the paper features two trusting beliefs that influence attitudes/behaviors. The study gathers US franchisee questionnaire data then analyzes the model using partial least squares techniques. Findings – Trusting belief‐competence was found to reduce non‐compliance with the franchisor, and also increase identification with the franchisor. Both trusting belief‐competence and trusting belief‐honesty were found to enhance satisfaction with the franchisor and perceived relationship quality. Neither of these two trusting beliefs was found to influence compliance with franchisor directives. Perceived mutual commitment appears to strongly influence both trusting beliefs, whereas length of time as a franchisee does not. Research limitations/implications – The findings support relational contracting theory, showing that even within a contract, trust exerts a significant influence on vital franchisee attitudes. Other research shows these attitudes/behaviors influence franchise performance, though the present study does not measure performance. Practical implications – The results suggest franchisee trust is key to the ongoing franchise relationship. Hence, franchisors should try to build franchisee trust. They can do so by enhancing mutual commitment and by supplying well‐conceived new products and marketing campaigns. Originality/value – This study clearly shows the value of franchisee trust and suggests several ways to build it.