A Qualitative Analysis of the Influence of Exclusive Territory and Tying Clauses on Franchisees’ Business Performance and Overall Satisfaction

Abstract

The fortunes of the Nigerian franchise industry has been on a downward spiral over the past few years. Practitioners and scholars have observed that the design of franchise contracts is a key element in the performance of franchise systems and franchisees in particular. No prior empirical study has investigated the influence of non-fee contract terms on franchisees business outcomes and long-term commitment in Nigeria. The objective of this study is to explore the influence of exclusive territory and tying arrangement on franchisees’ business performance and overall satisfaction. Face-to-face in-depth interview involving 26 franchisees was used to collect data from across different franchise brands in Nigeria. Each of the two contract terms investigated was found to have some form of influence on franchisees’ business outcomes. The study provides the first-ever exploratory insight into issues relating to franchise contracts in Nigeria, thereby helping to strengthen theory in the subject. The actionable recommendations offered will potentially help in reviving the industry for the benefits of the players and the economy at large.

Key Words:

Contract Design, Exclusive Territory, Tying Arrangement, Franchisees Overall Satisfaction