enanpad 2017

EnANPAD 2017 São Paulo / SP - 01 a 04 de Outubro de 2017

Socioeconomic Determinants of Support and Brand Value Perception: A Survey withMicrofranchisees

AutoriaMariângela Carli Santiago - [email protected]

Prog de Mestr em Admin/UNIP - Universidade Paulista

Andrea Giovani Lanfranchi - [email protected] de Mestr em Admin/UNIP - Universidade Paulista

Pedro Lucas de Resende Melo - [email protected] de Mestr em Admin/UNIP - Universidade Paulista

Julio Araujo Carneiro da Cunha - [email protected] de Pós-Grad em Admin/Mestr e Dout Acadêmico - PPGA/UNINOVE - Universidade Nove de Julho

Renato Telles - [email protected] de Mestr em Admin/UNIP - Universidade Paulista

ResumoFor more than ten years the franchising industry has been growing in Brazil. In this marketsegment are the microfranchises to act as a franchise whose initial investment amount is upto US$ 26,000.00. The purpose of this study is to verify if there is variation in the perceivedvalue of microfranchisees regarding the support provided by the franchisor and thedevelopment of the franchise chain brand due to their socioeconomic class. To analyze thesupport the variables used were: training, prospecting and installation of the franchise unit,legal and financial support, field consulting and operating manuals; in relation to the brandthe variables used were: advertising and promotion, brand strength and customer loyalty.The variables used are quantitative, and 148 microfranchisees in São Paulo were selected forthe survey. The statistical results did not support the association between the independentvariables and the dependent variables of the research.


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Socioeconomic Determinants of Support and Brand Value Perception: A Survey with

Microfranchisees

ABSTRACT

For more than ten years the franchising industry has been growing in Brazil. In this market

segment are the microfranchises to act as a franchise whose initial investment amount is up to

US$ 26,000.00. The purpose of this study is to verify if there is variation in the perceived

value of microfranchisees regarding the support provided by the franchisor and the

development of the franchise chain brand due to their socioeconomic class. To analyze the

support the variables used were: training, prospecting and installation of the franchise unit,

legal and financial support, field consulting and operating manuals; in relation to the brand the

variables used were: advertising and promotion, brand strength and customer loyalty. The

variables used are quantitative, and 148 microfranchisees in São Paulo were selected for the

survey. The statistical results did not support the association between the independent

variables and the dependent variables of the research.

Keywords: Franchise chain. Strategy. Microentrepreneurship. Socioeconomic classes.

Microfranchise.

1. INTRODUCTION

In the last ten years there has been an emergence and growth of microfranchises in

Brazil, in which the franchisor requires an initial investment up to US$ 26 thousand. This

limit is stipulated by the ABF based on three times the value of GDP Per capita. In 2014 there

were 433 active brands in several segments of the economy, that registered a growth in

number of units of 12.8% compared to 2013 (ABF, 2015).

Internationally, the emergence of microfranchises took place with a social character,

aiming at the creation of job and income opportunities to minimize poverty in the pyramid

base markets in Africa, Asia and Latin America, in countries that have an intense presence of

informal microenterprises (Fairbourne, 2006).

Microfranchises have emerged from the franchise model. They are a recent and

growing phenomenon in the universe of Brazilian companies that still lack academic support

for their understanding (Melo; Borini & Carneiro-Da-Cunha, 2014). They are legally ruled by

the same law that regulates the conventional franchises, law no. 8.955 / 94, although they

have peculiarities in their management, especially by the smaller value of the investment.

The franchise contract states that the franchisor must provide the franchisee with the

necessary support for the implementation of the business, training, supervision of activities

and management support. In addition, in the franchise model the franchisor grants the

franchisee the right to sell products or services under its brand name and also grants this

franchising compound comprised of the support and brand. Given these characteristics, small

entrepreneurs are attracted by the franchises, because, in theory, they bring more security to

the business, reducing the risk of failure (Combs; Michael & Castrogiovanni, 2004;

Grünhagen et al., 2008; Nijmeijer; Fabbricotti & Huijsman, 2014).

When microfranchises appeared in Brazil they sought adhesion of lower middle class

entrepreneurs, since they had a lower initial investment rate. Such class has grown

substantially in the last fifteen years in emerging countries. This growth is recognized in

studies that analyze socioeconomic classes in Brazil in this period (Neri, 2010; Souza &

Lamounier, 2010). However, the lower value of investment also attracted microentrepreneurs

from various socioeconomic backgrounds, for various reasons, such as the younger generation


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seeking for job opportunities and women seeking to supplement their family income (ABF,

2014).

Microfranchises have become an entrepreneurial option for various social classes,

which are expected to have different needs and perceptions regarding the business. Education

is a factor that differentiates the upper classes from the others, in years of formal education

and in the proportion of individuals attending university, according to data from the national

household sample survey (PNAD/IBGE, 2009). The motives that lead people to undertake

microfranchises are also of several natures: (1) desire to have their own business; (2) personal

or family history; (3) job dissatisfaction; and (4) unemployment (Valale; Correia & Reis,

2014; Serasa Experian, 2014).

The small entrepreneur does not always have training in the business area (Melo,

Borini & Carneiro-Da-Cunha, 2014). When small entrepreneurs decide to invest in a

microfranchise, their goal is to minimize the risks of starting a business, because they will

operate a brand and a product that have already been developed and tried out in the market,

they will have the know-how and assistance from the franchisor, all that with a low

investment. In some cases, it is not even necessary to have a site to open a physical store and

it is possible to manage the business from home.

The value of a franchisor for the franchisee is measured by the difference between the

overall benefit of being a franchisee and the total cost of the franchise acquisition (Grünhagen

& Dorsch, 2003). The intensity and effectiveness of the support provided by the franchisor to

the franchisee, allied with a strong brand, recognized by the public, can be determinant factors

for the success of the business unit and, therefore, has value for the microentrepreneur

(Grünhagen & Dorsch, 2003; Huang; Phau & Chen, 2007). This value, which is perceived by

the microfranchisee in terms of the support and brand of the franchise chain, may be different

according to its socioeconomic class of origin. The higher education in the higher classes

propitiates that the entrepreneur has a more critical view compared to microfranchisees of

lower classes with less education, in addition to the characteristic values inherent to each

socioeconomic class. (Neri, 2010; Melo; Borini & Carneiro-Da-Cunha, 2014).

This research aims to investigate whether microfranchisees belonging to different

socioeconomic classes perceive heterogeneously the support and the brand of the

microfranchise chain. The thesis is that microfranchisees that have values and life

trajectories influenced by social and economic factors attribute different perceptions of value

to the support and the brand provided by the microfranchisors. If this line is proven, it

indicates that microfranchisors should adopt business policies that particularize their

microfranchisees due to their socioeconomic origin.

In order to achieve this, two specific objectives are set: (1) to analyze the perception

regarding the support of the microfranchise chain, understood by the following attributes:

training, field consulting, operation manuals, legal and financial support. The second specific

objective involves (1) to verify the perception of the brand of the microfranchise chain by the

following attributes: advertising and promotion, brand strength and loyalty. This work has the

following structure: literature review, composed of microfranchise chains, support in

franchise chains, brand in franchise chains; hypothesis development; methodology; discussion

of the research results; and conclusion.

2. LITERATURE REVIEW

2.1. Microfranchise chains

Microfranchises were originally created with a social character, with the purpose of

reducing poverty by creating employment for the population at the base of the pyramid in


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poor countries of Africa, Asia and Latin America, which is composed of more than three

billion people. According to Fairbourne (p.19, 2006) "Microfranchise is the systematization

and replication of microenterprises with the intention of reducing poverty."

In the remote areas of Nepal it was possible to have schools operating in the form of

microfranchises with a successful model of distance education (Ivins, 2008), which made it

possible to improve the work and income conditions of those involved in distant places where

social services are insufficient. In Kenya, under the microfranchise approach as social

institutions, a microfranchise system built from a partnership between the kenyan government

and a non-governmental organization enabled the distribution of antimalarial drugs to the

population (Oduor; Kamau & Mathenge, 2009).

Burand and Koch (2010) added to the discussion the commercial and economic

character of microfranchises, addressing the need to search for financial sustainability in the

business and placing it as an opportunity for the population at the base of the pyramid, due to

the low implementation cost.

Microfranchises must focus on economic growth and efficiency to achieve the goal of

poverty reduction. This view was advocated by Kistruck et al. (2011). Such work has

deepened a debate on the need for financial sustainability in microfranchise and has brought

an analogy of this model and the conventional franchise model, since in both of them a party

acquires the rights to operate a peculiar business pattern offered by the other party under its

brand Guidance.

Melo, Borini and Carneiro-da-Cunha (2014) sought to identify whether there were

differences between microfranchises and conventional franchises in relation to the perceived

value of the franchisee on the support and brand offered by the franchisor, in order to

understand if there was a need for a differentiated management for each model. The study

concluded that the microfranchisees do not observe differences in the support offered in the

microfranchises compared to the conventional franchises. Regarding the microfranchise

brand, they considered it weaker than the conventional franchise brand, because the latter has

a greater insertion in the media and the first is still little known, or totally unknown, by the

public, but they choose it because of the lower cost of the initial investment.

The specific characteristics of the microfranchisees and their personal antecedents are

elements that deserve attention in the model of microfranchise. Once it requires an initial

investment smaller than the conventional franchises, it can attract entrepreneurs without

knowledge and experience in business management, demanding a differentiated support from

the franchisor. Regarding the brand, also because of the smaller investment value of the

model, it can be expected less investment in advertising and marketing in relation to the

conventional franchises, which may compromise the perceived value by the microfranchisee.

(Grac & Weaven, 2011; Melo; Borini & Carneiro-Da-Cunha, 2014).

2.2. Support in franchise chains

By signing the franchise contract, microfranchisees pay an entrance fee, tied royalties

and advertising fees to the franchisor. In return, they receive the right to use the franchisor

brand and a number of services provided by the franchisor, which may include legal advice,

location and real estate development consultancy, advertising campaigns and training

(Grünhagen & Dorsch, 2003).

It is expected that franchisors provide not only a control system over the franchisees

network (Lombardi et al., 2015), but also a support system to them. This microfranchise

inherent support in the franchise contract attracts small entrepreneurs to the business because

of the perceived safety and endorsement (Dant, 1995). The importance of small enterprises to

the development of nations is recognized throughout the world. The opening of a new small


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business by microentrepreneurs, who do not always possess the numerous skills expected for

businessmanagement, brings with it risks and uncertainties to business. The adherence to the

franchise system has been an important option as it allows the franchisee to join businesses

tested and governed under the guidance and assistance of the franchisor (Chiou, Hsieh &

Yang, 2004).

The value of a franchisor to the franchisee is measured by the difference between the

overall benefit of being a franchisee and the total cost of the franchise acquisition (Grünhagen

& Dorsch, 2003). The effectiveness and intensity of the support provided by the franchisor to

the franchisee can be a determining factor for the success of the business unit and therefore

has value for the microentrepreneur (Grünhagen & Dorsch, 2003; Monroy & Alzola, 2005;

Huang; Phau & Chen, 2007).

The relationship between franchisor and franchisee in a franchise system is complex

and presents particularities, since it is not a simple buy-and-sell, supplier and customer or

employer and employee relationship. Franchise is related to partnership, in which the role of

the franchisor is not only to control and guide the partner. The established contract has mutual

rights and obligations that must be fulfilled by both parties in a good working relationship.

The success of the franchisor depends on the success of the franchisee and vice versa (Cohen

& Silva, 2000; Nijmeijer, Fabbricotti & Huijsman, 2014).

2.3. Brand in franchise chains

According to the American Marketing Association (AMA), brand may be defined as

"a name, term, sign, symbol or design, or a combination thereof, intended to identify the

goods or services of a supplier or of a group of suppliers to differentiate them from those of

other competitors" (Pinho, 1996, p.14).

The brand is one of the most valuable elements that a company has. Developing it

requires meticulous planning and a long-term commitment. Strong brands favor consumer

loyalty, which, if satisfied, repeats purchases (Aaker, 1996). The strength of the brand is a

relevant factor in gaining and maintaining franchisees (Ghantous & Jaolis, 2013), since it

minimizes the risks of investment in the business (Grace & Weaven, 2011). The added value

of the brand to a market offer - whether a product, service or a franchise package - is known

as brand equity (Aaker, 1996; Farquhar, 1989; Ghantous & Jaolis, 2013). Brand management

leads to successful brands, which in turn contributes to a high brand value (Pitt; Napoli & Van

Der Merwe, 2003).

The monitoring and management of the brand in the franchise system has a

complexity that is not found in conventional businesses, in which the entrepreneur has

unlimited management control. In franchising, all parties - franchisors and franchisees - are

co-responsible and codependent of the brand, whose firm and constant assessment is given by

the final consumer (Pitt; Napoli & Van Der Merwe, 2003).

When a microfranchisee joins a franchise, he receives from the franchisor the right to

sell goods or services with its brand as well as the franchisor support for the business (Combs;

Michael & Castrogiovanni, 2004). This is especially relevant when microfranchisee resources

are scarce and he tends to value his money more. A strong brand simplifies the process of

choosing among the various franchisors, since it reduces the risk associated with the venture

and increases the chances of success of the business (Ghantous & Jaolis, 2013). Investments

of franchisors in advertising, promotion and brand strengthening provide customer loyalty and

consequently greater financial returns to the venture (Aaker, 1996; Ghantous & Jaolis, 2013).


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3. HYPOTHESES DEVELOPMENT

3.1. Perception of value relative to franchisor support

By signing the franchise contract, the microfranchisee undertakes to comply with a

series of pecuniary and legal obligations so that he may receive, in return, assistance and

support from the franchisor for the operation of the business. The concept of value, from the

point of view of the microfranchisee, is based on the difference between the benefits received

as a franchisee and the costs incurred to acquire the franchise. (Grünhagen & Dorsh, 2003).

The microfranchisee perceives the value received from the franchisor through its subjective

values and need for support regarding the implementation of the business, management

support, training and operations manuals (Chiou; Hsieh & Yang, 2004; Grace & Weaven,

2011).

Microfranchisees comes from different economic classes and some studies show that

the ways of being, consuming, thinking, habits, and the social and cultural values vary among

economic classes (Yaccoub, 2011). The time devoted to formal education is greater among

the wealthier socioeconomic classes, which directly affects the formation of individuals (Neri,

2010). Data from the 2010 IBGE PNAD shows that the average time devoted to education is

12 years of study in upper classes and 7 years in lower middle class. According to the same

source, the proportion of college graduates is of 47.6% in upper classes and of 10.47% in

lower middle class. This difference in the time devoted to formal education can mean better

training and preparation of upper classes for the management of business, resulting in a more

critical value perception of the higher income classes regarding the support offered by the

franchisor in the microfranchise, while the lower middle class is expected to require greater

support for business deployment and management, demanding more attention from the

franchise chain. There are studies in the literature that point out a greater need for technical

training of microentrepreneurs (Krishnan & Kamalanabhan, 2013).

When signing the franchise contract, the franchisee pays the franchisor an entrance

fee, plus royalties and advertising so that he can use the business format. In return, he must

receive the necessary support for the execution and success of the enterprise, which includes:

training; support in financial management and legal aspects; support for site selection and

installation of the franchise unit; field visits and operation manuals (Grünhagen & Dorsch,

2003; Huang; Phau & Chen, 2007; Monroy & Alzola, 2005; Chiou; Hsieh & Yang, 2004).

The reduced value of microfranchise investment, compared to conventional franchise,

means that the franchisor has a smaller budget to provide the necessary support for the

operation of the business and may result in a decrease in the quality or frequency of support

provided to microfranchisees. (Grünhagen et al., 2008; Melo; Borini & Carneiro-Da-Cunha,

2014). Hence, the following hypothesis is proposed:

H1: The higher the microfranchisee income, the lower the perception of value in relation to

the support offered by the franchisor.

3.2. Perception of value relative to the franchise brand

The franchise contract provides that the franchisee, through the payment of the

entrance fee, the royalties and advertising fees, may use the brand of the franchisor, which the

stronger and more recognized by the public, the more value adds to the business (Aaker,

1996; Combs; Michael & Castrogiovanni, 2004). The value of a brand attracts and retains

franchisees to the business and to the franchise relationships as it helps to reduce the risk of

the franchisee's investment. (Ghantous & Jaolis, 2013; Grace & Weaven, 2011). The strength


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of the brand encourages the franchisee to enter and remain in the franchise chain because of

its power to attract and retain customers (Ghantous & Jaolis, 2013).

Because there is a maximum initial investment rate for an enterprise to be considered

as microfranchise, it can be understood that advertising and marketing funds have fewer

resources compared to a conventional franchise. This results in a weaker brand, less

recognized by the public, what may bring unfavorable repercussions to the business (Melo;

Borini & Carneiro-Da-Cunha, 2014).

Microfranchisees come from several economic classes, with socio-cultural

characteristics that are not necessarily similar. They have values, behaviors, level of education

and habits that are peculiar to the economic classes of origin (Neri, 2010; Yaccoub, 2011).

These differences are expressed in the way people consume and live and can result in

different levels of perceived value by the microfranchisee in relation to the assistance received

from the franchisor in respect of the franchise brand, expressed in advertisements and

promotion, brand strength and customer loyalty. It can be assumed that the most favored

socioeconomic classes, due to their more educated and intellectual formation, have a greater

expectation about the benefits that the brand of the franchise chain can bring to the business.

In contrast, the lower middle class accept to have a less prestigious brand because of their

different values and references (Huang; Phau & Chen, 2007; Ghantous & Jaolis, 2013).

Therefore the following hypothesis is proposed:


the brand of the franchise chain.

Figure 1: Research framework

Source: authors (2016)


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4. METHODOLOGY

The sample was extracted in a non-probabilistic and intentional way, since it was

desired to interview microfranchisees based in the state of São Paulo, given its

representativeness in the national economic scenario. The questionnaires were applied in

microfranchisees. 148 microfranchisees were selected from 70 franchise chains operating in

15 different segments. The research was conducted between September and October 2015 and

face-to-face interviews were used when possible for the interviewee and by telephone when

personal contact was not possible.

Before the survey was applied to the interviewees, an approach was taken through the

initial questionnaire for stratification of the microfranchisees income, within the parameters of

Critério Brasil of the Associação Brasileira das Empresas de Pesquisa - ABEP. After that,

the survey was started, with 24 closed questions, built in the light of the theory, whose

answers are in Likert scale of 1 (one) to 5 (five). This questionnaire addresses, from the point

of view of the franchisee, the level of appropriateness of the support offered by the franchisor

in the variables: training; prospecting and installation of the franchise unit; legal and financial

support; field consulting and manuals; support received for advertisements and promotion;

and identity, strength and loyalty to the brand of the franchise.

The population of microfranchisees is restricted to 433 franchise chains that exist in

the national territory. Given the representativeness of the state of São Paulo, which has 52.6%

of the franchise chains (ABF, 2015), it was decided to select the sample in this state, due to

operational, temporal and financial limitations. However, it can be assumed that the selected

sample is potentially qualified, since it was selected 148 microfranchisees, from 70 franchise

networks, of 15 business segments, which composes 93% of the total revenue of the cataloged

business segments (ABF, 2015).

4.1. Variables development

The dependent variable is the income of the microfranchisee, since the perceptions,

needs and desires may vary according to the individual values and according to their

socioeconomic class. (Chiou; Hsieh & Yang, 2004; Souza & Lamounier, 2010).

The independent variables of hypothesis 1 are: (1) training, (2) legal and financial

support, (3) advice on choosing the franchise location and installation, and (4) field consulting

and manuals (Grünhagen & Dorsch, 2003; Huang; Phau & Chen, 2007; Monroy & Alzola,

2005; Chiou; Hsieh & Yang, 2004). In hypothesis 2 the variables are the following: (1)

advertising and promotion; (2) brand strength; And (3) loyalty (Aaker, 1996; Nyadzayo;

Matanda & Ewing, 2011; Ghantous & Jaolis, 2013; Nijmeijer; Fabbricotti & Huijsman,

2014).

5. DISCUSSION AND IMPLICATIONS

5.1. Multivariate statistical analysis

In this section we will present the Cronbach's Alpha analysis, followed by Pearson's

correlation analysis, evaluating the overall reliability of the results. The Cronbach Alpha

coefficient aims to verify the reliability of a questionnaire applied in a research. It evaluates if

the variables listed for a construct are associated with each other and it is a measure of

internal consistency. According to Peterson (1994), the values for Cronbach's alpha which are

greater than 0.700 are acceptable, and results higher than 0.900 indicate the existence of a

very high reliability.


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The following Table shows the results for Cronbach's Alpha concerning the eleven

brand-related question. The results presented in Table 1 indicates the existence of a high

reliability since 0.956 is considered a very high value

Table 1 - Reliability statistics (Cronbach's Alpha) of brand variables in the franchise chain

Cronbach’s alpha Number of items

0,956 11

Source: Research results (2016).

In the same way, Cronbach's Alpha is evaluated regarding the thirteen questions

related to the actions of support to the franchisees. The results presented in Table 2 indicates

the existence of a high reliability, since 0.948 is considered a very high value.

Table 2: Reliability statistics (Cronbach's Alpha) of the variables related to the franchisor’s support

Cronbach’s alpha Number of items

0,948 13

Source: Research Results (2016).

As the analysis of the Cronbach's Alpha coefficients presented robust and sufficient

results, two constructs denominated Brand and Support were created. Table 3 shows the

descriptive statistics of both constructs.

Table 3 – Descriptive statistics of Brand and Support constructs

BRAND SUPPORT

N Valid 148 148

Absent 0 0

Mean 3,3348 3,0852

Median 3,5455 3,1538

Mode 4,00 4,00

Standard deviation 0,84884 0,86524


The information indicated in table 3 shows the values of the number of observations,

number of missing observations, as well as the values for the mean, median and mode, and

the standard deviation.

Analyzing closely the data in table 3 it is possible to verify that both constructs are

very close, however, it can be noticed that the value of the mean is slightly higher for the

construct Brand (3.3348), indicating a level of satisfaction slightly higher than the satisfaction

attributed to the construct Support (3.0852). This difference is more evident when one

observes the values of the median, which for the Brand presents a value of 0.3917 greater than

for the Support. The data variance is also slightly higher for the support, which has a standard

deviation of 0.0164 higher than the brand.

5.2. Correlation and regression analysis

Given the constructs, Brand and Support, this section is intended to make an analysis

of the correlations. Pearson's correlations verify how much the variables are associated. There

are three important aspects that should be observed in a correlation analysis, explained below.

The first one is the signal, whether it is positive or negative. The positive sign

indicates that a variable when altered, either up or down, will influence its correlated variable


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in the same way. In the case of negative signal, when a variable increases the correlated

variable decreases, the inverse being also true.

Second, the value of correlation. It indicates the existence of association between the

variables and the values may indicate a weak, moderate or strong correlation. Values

greater than 0.900 indicates a very strong correlation, values between 0.700 to 0.900 are

indications of a strong correlation, values between 0.500 to 0.700 are indications of a

moderate correlation, and values below 0.500 indicates a weak correlation (Pestana &

Gageiro, 2008).

In the third place, the level of significance of the correlation is verified, that is, if that

correlation, whether positive or negative, is strong, weak or moderate and if it has statistical

significance. This occurs when the P value is less than 5% (0,05), or if it is less than 1%

(0,01) (Pestana & Gageiro, 2008).

Thus, Table 4 shows the correlations of the dependent constructs (APUR in

continuous values and CLAS divided in socioeconomic class) and independent (Brand and

Support). It seeks to analyze whether there is a correlation between socioeconomic class and

whether this variable influences the level of satisfaction with the brand and the support.

Table 4 – Correlation of dependent constructs

APUR

SOCIAL

CLASS

PLUSS

CLAS

SOCIAL

CLASS

BRAND SUPPORT

APUR social class

pluss

Pearson's Correlation

1

Sig. (2 Extremities)

N 148

CLAS social class Pearson's Correlation

,928** 1

N 148 148

BRAND Pearson's Correlation

-,157 -,154 1

Sig. (2 Extremities) ,057 ,062

N 148 148 148

SUPPORT Pearson's Correlation

-,040 -,063 ,706** 1

Sig. (2 Extremities) ,630 ,448 ,000

N 148 148 148 148

** The correlation is significant at the 0.01 level (2 extremities).


When analyzing the APUR x BRAND variables, presented in Table 4, it is possible to

infer that there is no correlation between these variables, since they present very low values.

The same happens with APUR x SUPPORT, since the low value indicates the inexistence of

correlation between the two variables and do not present statistical significance. In addition,

the signal is negative. The set of variables CLAS x BRAND and CLAS x SUPPORT also do

not present any correlation among themselves, since the values are very low and do not

present statistical significance. In addition, the signal is also negative

The only variables that have a correlation between them are BRAND x SUPPORT,

which are positively correlated, which indicates that the growth of satisfaction or investments

in the brand will also lead to a growth proportional to the support variable. Moreover, in

addition to the strong positive correlation between the variables, of 0.706, it is also possible to


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observe the existence of statistical significance at the 1% level (p <0.01), indicating that this

correlation can be considered.

Table 5 shows the correlation of the dependent constructs with all independent

variables of the BRAND and SUPPORT constructs, allowing an analysis of each variable

individually to corroborate the observation of the correlation pointed out in the previous

paragraph.

Table 5 – Correlation of the constructs that form the variables

APUR

Social

class pluss

CLAS

social

class

APUR | Social class pluss Pearson's Correlation 1 ,928**

Sig. (2 extremities)

,000

N 148 148

CLAS | Social class Pearson's Correlation ,928** 1

Sig. (2 extremities) ,000

N 148 148

MPRO | Satisfaction with advertising and promotion

Pearson's Correlation -,131 -,120

Sig. (2 extremities) ,114 ,148

N 147 147

MMPR | Satisfaction with development of promotional

material



N 147 147

MEXP | Satisfaction with product exposure Pearson's Correlation -,057 -,065


N 143 143

MCPR | Satisfaction with promotions created



N 144 144

MDIV | Satisfaction with brand disclosure



N 148 148

MIMG | Satisfaction with brand image



N 148 148

MIPU | Satisfaction with brand image perceived by the

public

Pearson's Correlation ,004 -,041


N 148 148

MMEL | Satisfaction with brand image improvement



N 148 148

FFID | Satisfaction with franchisor actions for consumer

loyalty



N 142 142

FCON | Satisfaction with franchisors actions that foster

brand confidence

Pearson's Correlation -,178* -,155


N 146 146

FPRE | Satisfaction with franchisors actions that foster

brand preference

Pearson's Correlation -,175* -,173*


N 145 145

FTAC | Satisfaction with training for customer service Pearson's Correlation -,091 -,083


N 146 146

FTAF | Satisfaction with financial management training Pearson's Correlation -,137 -,118


N 144 144

FTRH | Satisfaction with training for human resources

management




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N 143 143

FTGN | Satisfaction with training in business

management



N 145 145

FAIF | Satisfaction with support received from the

franchisor in the implementation of the franchise



N 143 143

FAEP | Satisfaction with support received from

franchisor for point of sale choice



N 118 118

FAPL | Satisfaction with support received from the

franchisor for layout planning



N 116 116

FACE | Satisfaction with support received from

franchisor to purchase equipment

Pearson's Correlation ,036 ,029


N 130 130

FAIN | Satisfaction with support received from

franchisor for franchise inauguration



N 123 123

FCCC | Satisfaction with the clarity of the franchisor on

the clauses of the franchise agreement contract



N 147 147

FCFP | Satisfaction with financing and payment

conditions offered by the franchisor



N 146 146

FCCA | Satisfaction with field counseling provided by

the franchisor



N 145 145

FMOP | Satisfaction with operating manuals developed

by the franchisor



N 146 146

** The correlation is significant at the 0.01 level (2 extremities).

* The correlation is significant at the 0.05 level (2 extremities).


An analysis of the data in Table 5 shows that there are virtually no variables that

correlate adequately between the CLAS and APUR variables. There are only two variables

that show a weak correlation. The association between the level of satisfaction with the

franchisor's actions that fosters confidence in the brand and the social class (FCON x APUR),

which presents a negative correlation of -0.178, is considered to be inexpressive, although its

level of significance is 0.031 (p <0.05). The same happens with the variable satisfaction with

actions of the franchisor that fosters preference for the brand, which presents an inexpressive

negative correlation, both with social class and social class plus (FPRE x APUR and FPRE x

CLAS). However, in addition to both correlations being negative, both are inexpressive,

presenting values -0.175 and -0.173, respectively, despite the level of significance of 0.035

and 0.038 (p <0.05).

In this way, the existing correlations between the constructs under analysis could only

be observed between the Brand and Support constructs. To analyze the existence of

multicollinearity, table 6 is presented, in which the Brand and Support constructs are tested.

The strong correlation between these constructs may indicate multicollinearity, that is, two

independent variables that can measure only one indicator and influence the result. To carry

out this verification, the VIF and Tolerance multicollinearity test was performed. These tests

indicate the existence of multicollinearity when the VIF value is greater than 5,000 and

Tolerance approaches 0.000. Table 6 presents the results that show the absence of

multicollinearity in both tests: VIF and Tolerance (Pestana & Gageiro, 2008).


12

Table 6 – Analysis of absence of multicollinearity by the VIF test

Model

Collinearity statistics

Tolerance VIF

BRAND 0,502 1,992

SUPPORT 0,502 1,992


Finally, a last multiple linear regression test is presented, in order to prove the

hypotheses and to verify if brand and support, when taken together, are associated to the

socioeconomic class dependent variable (APUR and CLAS). What is being tested is:


the support offered by the franchisor.


the brand of the franchise chain.

In order to verify the existence of the above hypotheses, a regression test was

performed. A regression test, so that it has an adjustment to the F statistic, must have a

significant value, which means the value of P must be less than 5% (p <0.05). The adjusted R-

squared value indicates the explanatory power of the model. The Beta values and the sign

indicate the association with the dependent variables when there is significance, that is, P

<0.05 or P <0.01. In this case, it is possible to verify in Table 7 the result of the regression

analysis for the two forms of calculation of the socioeconomic classes (APUR and CLAS).

Table 7 – Regression analysis (APUR and CLASS)

Model for CLAS Model for APUR

Beta Significance Beta Significance

Constant 5,306 0,000 45,074 0,000

Brand -,278 0,062 -3,066 0,028

Support 0,114 0,434 1,654 0,223

F 2.065 .131 2.593 .078

R² adjusted 0.014 0.021


When observing the results of multiple linear regression, it is possible to verify the

non-fit of the two models (non-significant F test). Despite the significance for the brand in the

APUR model, it is not possible to establish an association relation between the dependent and

independent constructs. Thus, hypothesis testing has resulted in both hypotheses being

unsupported.

6. CONCLUSION

The intention of this research was to verify the perceived value of the microfranchisee

due to its socioeconomic class. In order to do so, two specific objectives were proposed: (1) to

analyze perception of value by the microfranchisee in relation to the support provided by the

franchisor (training, prospecting and installation support, legal and financial support, field

consulting and operation manuals); and (2) to verify the perception of value by the


13

microfranchisee regarding the development of the brand by the franchisor (advertising and

promotion, brand strength and loyalty).

The results of the multiple linear regression test applied in hypotheses 1 and 2 were

revealing, both were not statistically supported.

Hypothesis 1 was about the perception of value of the franchisor's support. It is

aligned with international studies that verified the importance of the positive perception of the

value by the franchisee in relation to the support received from the franchisor, to the training

offered for the execution of the business and installation of the franchise unit, to legal and

financial support, to the provision of field consulting and to appropriate operating manuals, so

that the franchisor and franchisee relationship is strengthened and lasting, resulting in the

franchisee's desire to remain in the franchise chain (Grünhagen & Dorsch, 2003; Chiou; Hsieh

& Yang, 2004; Monroy & Alzola, 2005; Grace & Weaven, 2011).

Hypothesis 2, which dealt with the franchisee's perception of the value of the franchise

chain brand, was supported by previous research showing that with the payment of the

entrance and advertising fees and royalties, the franchisee gets the right to use the Brand of

the franchisor. The stronger and more recognized the brand, through advertising and

promotions of the franchise chain and actions to strengthen the brand, the greater the loyalty

of the franchisee to the business, in addition to attracting and retaining consumers, which is

the primary function of the business (Aaker, 1996; Combs; Michael & Castrogiovanni, 2004;

Ghantous & Jaolis, 2013).

The results of the statistical tests did not confirm hypotheses 1 and 2, contrary to the

thesis defended by the authors of this research, in which there would be differences in the

perception of value by the microfranchisees due to their socioeconomic class. There were no

statistical correlations between the variables under analysis. The hypotheses were developed

with the microfranchisee income as a dependent variable, since studies state that the

perceptions, needs and desires of the individuals can vary according to the individual values

and according to their socioeconomic class. (Chiou; Hsieh & Yang, 2004; Souza &

Lamounier, 2010; Yaccoub, 2011).

Regarding support, hypothesis 1 was based on the assumption that franchisees with

lower incomes would have greater difficulty in running the business, requiring more support

from the franchisor, once they had fewer years of study and less training for management

(Neri, 2010). Therefore, they would have a greater perception of value of the received

support. Regarding the brand, contemplated in hypothesis 2, the claim was based on that

franchisees with higher income would have a lower perception of value as to the brand

attributes of the franchise chain, seeing it as less prestige and less known to the public, due to

the limitation of values for investments, which has a maximum of US$ 26,000.00 (Huang;

Phau & Chen, 2007; Ganthous & Jaolis, 2013; Nijmeijer; Fabbricotti & Huijsman, 2014).

The results shows that regarding the franchising mix - support and brand - the

perception of value by microfranchisees does not differ, even if they originate from different

socioeconomic classes. Entrepreneurs of different classes have their own socioeconomic class

values and bring them when in the performance of the microfranchisee functions, which

could, by deduction, reflect in different perceptions of value. This means that, regardless of

the socioeconomic class, the microfranchisees surveyed do not present different perception of

value as to the support and brand of the franchise chain.

The academic contribution is to add to the restricted number of national and

international publications on the management of microfranchises the point of view of

microfranchisees. (Harmon & Griffiths; 2008; Huang & Phau, 2008). In addition, no studies

were found in the international and national literature that addressed the franchising mix -

support and brand - according to the socioeconomic class of the franchisee, allowing this to be


14

a starting point for research related to the theme (Oduor, Kamau & Mathenge, 2009; Ivins,

2008; Kistruck et al, 2011).

At last, the franchisors’ decision of selecting franchisees should not consider merely

the socioeconomic characteristics as predictors of their support and brand image perception.

Socioeconomic factors could be further studied as a variable related to franchisees’ other

perceptions or other personal characteristics such as efforts towards their business

As a managerial contribution, this research brings important suggestions to the

franchise chains, which can verify the current level of microfranchisees satisfaction with the

support provided and the investments in the brand, adjusting them in order to reduce conflicts

between the parties, strengthening trust ties between the microfranchisee and the franchisor.

Research limitations include: (1) Absence in the questionnaire of an inquiry that

addressed the motivators that led the microfranchisee to join the franchise chain. With this

question, it would be possible to measure whether initial expectations were met and how

satisfied they were at the time of the survey; and (2) It was not taken into account the age

group of the interviewees, which might have made possible a deeper understanding of the

experiences and the generational values of the sample group.

Among the future research suggestions are: (1) Analyze the expectations and

motivators of microentrepreneurs when they join the franchise chain, if they have been

satisfied and at what level; (2) It is suggested to research about how long the interviewees are

microfranchisees, in order to understand if the level of satisfaction may be impacted by the

honeymoon effect due to the enthusiasm of the start of the business; and (3) Finally, we

suggest studies that focus on the age range of respondents and the perception of value in

relation to support and brand focusing on generational values.

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enanpad 2017

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