Divided by a common business? Franchisor and franchisee relationships in the pub sector

The relationship between franchisee and franchisor can be described as being based on a number of dynamic tensions that are clearly illustrated in the relationship between pub operating companies and their tenants and lessees. The differences in business objectives, control and support together with variations in power are common to all franchise relationships. In the pub sector tensions are further intensified when the operating companies are constrained by legal and economic pressures. Short-term concerns often result in tenants and lessees being located in pub properties that are not suited to their circumstances, resource and needs. Selection and recruitment of tenants and lessees is often driven by the need to secure a rent-paying tenant or lessee into a property. A consequence of this approach is that there is a high turnover of tenants and lessees that can add considerably to operating costs. In addition, many of the companies in this research were not providing their tenants and lessees with the levels of advice and support that might help the smaller firms overcome their resource disadvantage. This paper argues that as the pub companies move increasingly towards high volume retail orientations they will need to examine some of the more formal franchise arrangements. These arrangements would involve much more careful scrutiny of potential tenants and lessees together with more centrally defined operating systems and closer support from business advisors.