Understanding of the Research Strategy of the Article on Marketing and Branding

Academic Article Review
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Academic Article Review
Outline of The Article’s Research Aims and Questions
This essay will review the article by Freiwald et al. (2020). The research-based article is from a 3* ABS-ranked journal related to marketing and branding. Freiwald et al. (2020) analyze the geographic factors that impact McDonald’s franchising decision by centering on location-particular features of the outlets. The study aimed to understand the location factors that influence company-owned versus franchise retail sales establishments using information gathered on all McDonald’s franchises across Germany. Franchising is a form of marketing through which companies maintain brand reputation and a profitable business model (Hizam-Hanafiah et al., 2022). The promotion of franchise businesses to build brand awareness, increase customer share, and drive revenues have grown over the last few decades. It now plays a critical role in the food industry (Bui et al., 2022). It is common for franchise businesses to have a dual distribution model where company-owned retail sales establishments co-exist in the same locality as franchised ones (Croonen et al., 2021). However, the impact of geography on such a dual distribution model has received little scholarly attention, and Freiwald et al. (2020) study aimed to fill that knowledge gap.
The study sought to test two hypotheses against the background of transaction cost arguments and the agency theory: Hypothesis 1 – The likelihood that the company operates a particular retail sales establishment: (a) reduces with the prominence of local knowledge and the availability of repeat customers (repeat customer hypothesis) and (b) reduces with the supervision expenses (supervision hypothesis) and Hypothesis 2 – Multi-unit franchises control local clusters of retail sales establishments (clustering hypothesis).
A Discussion of The Article’s Application of Research Philosophy and Theory
The study employs a realistic research philosophy where the research methods are based on the subject matter. Realism research is grounded on the assumption of a methodical approach to constructing knowledge (Bell et al., 2022). The research philosophy can be grouped into two: direct and critical. Freiwald et al. (2020) is more critical than direct since it recognizes the influence of bias and other factors in understanding the researched reality. This approach is more appropriate for investigating a complicated research topic since it allows the researcher to capture a broader perspective of the phenomenon (Cooper & Schindler, 2003). The multi-level study also employs the epistemology research method, where knowledge is historically situated and transient. For instance, Freiwald et al. (2020) describes current franchise literature on co-existing company-operated retail sales and franchised establishments. However, the study does not limit itself to existing theories on the dual distribution of franchise businesses. It seeks to investigate the less explored impact of the economic geography of franchising.
The leading theory undergirding the study is the agency theory, a principle used to explain corporate governance. According to the theory, corporations serve as agents of their shareholders: corporations are entrusted by their shareholders to make decisions on their behalf and act in their interests. Shareholders entrust their resources to corporate directors and therefore have a stake in corporate ownership. Agency theory revolves around the relationship between corporate offices and shareholders, especially the issues that may arise due to contrary risk perspectives and corporate goals. The theory posits that a difference between the long and short-term objectives of corporations and shareholders is caused by information asymmetry and short-term goals for profits (Zalina & Yusof, 2016). This divergence in corporate objectives between corporate offices and shareholders tends to impact the choices and actions of both parties, particularly the former, who may become disconnected from the latter’s interests. This theory suits the research topic since it explains the relationship between McDonald’s and its franchises. The promotion of franchise business separates McDonald’s from operational control of its franchise outlets, resulting in agency problems. These agency problems and how they relate to geographic factors are the focus of the article, and therefore, the agency theory is an effective theoretical framework to base the research.
A Critical Examination of The Article’s Use of Its Literature Review Throughout the Paper
While the study does not have a literature review section, it effectively uses a few studies on the multi-unit franchise phenomenon. An effective literature review must include current knowledge relevant to the research topic and the boundaries and shortcomings of that chosen field (Hart, 2001). The first study by Combs (2003) explains why firms use franchising as a business and marketing strategy. This article contributes to the article by underlining the entrepreneurial strategy underlying the concept of multi-unit franchises. Unlike other studies conducted in the 1990s, the study by Combs (2003) explains franchising as a new endeavor concerning critical factors like geographic dispersion of retail sales establishments, firm age, company growth rate, and royalty rates. Freiwald et al. (2020) also includes the study by Kalnins & Lafontaine (2004), which employed a quantitative approach to investigating the prevalence of multi-unit franchising and how companies allocate ownership of retail sales establishments. This study was crucial to the current article since it provided a knowledge base to test the impact of geography on dual distribution empirically. Furthermore, Kalnins & Lafontaine (2004) were the first authors to empirically show that companies consider location when deciding ownership of retail sales establishments and which units to retain under company control.
Another study included in the article is by Gallini & Lutz (1992), which was the first to study property rights as they relate to the allocation of decision rights in franchise businesses. The study is critical to the current article since it provides a method for investigating how property rights influence franchise allocation and distribution. Gallini & Lutz (1992) also incorporate the agency theory to analyze the issue of asymmetric information between companies and their franchises and develop organizational solutions for the challenge. Another study included in the article is by Minkler (1990), which tested several hypotheses, including the idea that companies franchise from monitoring and search costs. The study was one of the first to investigate the multi-unit franchise phenomenon. Minkler (1990) provides an empirical framework for later studies investigating the critical success factors that influence the allocation of franchises. In conclusion, the article is efficient in its use of current literature. All articles included in the study are relevant to the investigated research topic.
A Thorough Discussion and Analysis of the Article’s Methodology
The article employed the quantitative research methodology. Quantitative research methodology relies on gathering and analyzing numeric data to find answers and make predictions (Davies & Hughes, 2014). Freiwald et al. (2020) collected data from 1,478 McDonald’s retail sales establishments in Germany in 2016. The study determined the proportion of company-owned versus franchise outlets from the official McDonald’s website. Using geocoding, the authors identified the locations of restaurants near highways and their distance from each other. Furthermore, the study collected data on the population density and regional GDP per capita of the local areas in which the restaurants were located. The purpose of gathering all these data was to understand the geographic factors that shape the structure of McDonald’s retail sales establishments and how the structure addresses agency problems common in franchise businesses. Inferential statistics involved estimating a probit model with the business dummy variable as the dependent variable. The probit model is a regression model where the dependent variable is allowed to take just two values. In the study, the franchise dummy variable could only present a result that suggested McDonald’s franchised restaurants situated near highways or the global brand was less likely to allocate ownership to franchises to restaurants located near highways.
Freiwald et al. (2020) also tested the influence of region-fixed impacts on McDonald’s decision to franchise restaurants near highway routes, especially in regions where company-owned and franchise outlets coexisted. This analysis was meant to test the customer hypothesis (the likelihood that the company operates a particular reta...