Making The Decision (Or Not) To Franchise

Working Knowledge:

From neighborhood to neighborhood - even from block to block - customers have different tastes in the products they buy and the retail experience they find most enjoyable.

As a business owner operating stores across multiple markets, is it possible to please everyone? Can executives back at headquarters maximize an organization’s overall revenues by efficiently (and effectively) monitoring the desires of consumers representing a wide range of ethnicities and income levels, large families and singletons?

Much has been written about product differentiation and its role in retail success. Now the less well-known dynamic of customer differentiation and its effect on the way businesses are structured and run is examined in a recent Harvard Business School working paper, “Organizational Design and Control across Multiple Markets: The Case of Franchising in the Convenience Store Industry.” The study was written by HBS professors Dennis Campbell and Srikant Datar, with Tatiana Sandino (HBS DBA ‘04) of USC’s Marshall School of Business.

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