Franchising is a common choice for people who are considering an entrepreneurial leap, but end up deciding to wade into it first. It offers a structured way to start a business, and, as a new Harvard Business School study shows, franchising also makes sense for the franchiser too. The research examined how convenience stores move into new markets serving different demographic groups. It finds that retailers who employ a franchise model tend to have an easier transition into new markets. Franchisee store managers are more motivated and also more likely to have closer community connections. It also appears that these franchised stores have higher unit sales. The study concludes by noting that organizational designs similar to franchising might be an effective approach for other organizations that are moving into diverse new markets.

Download the 2008 Harvard Business School Working Paper (08-091), “Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry,” by Dennis Campbell, Srikant M. Datar, and Tatiana Sandino.