Franchise Survival Ability During Economic Crisis: A Theoretical Explanations

Abstract

‘Novel exogenous shocks’ of Covid-19 Pandemics was described as the worst economic crisis that has resulted in ‘business fatigue’ and declining business confidence and putting them in the hazard of business failure. Franchise sector is the backbone of Malaysia’s economic growth, development and recovery engine; therefore, their survival is crucially significant. The purpose of this paper is to explain theoretically on how franchises could sustain during pandemic crisis. The study contributes to the body of franchise literature of strategic management to better explain franchisee ability to survive during turbulent environments through valuable, rare, inimitable and non-substitutional franchise resources, capabilities and, franchise internal and external support systems. The reviewed theories are Agency Theory, Resource Based View, and Institutional Theory. The findings of the review found five propositions of franchise survival factor during crisis which are; financial resource, human resource, brand name, franchisor support and institutional support. This paper makes significant theoretical contributions in franchising management and support systems to enhance franchisee survival ability in the dynamic market, environmental shock and high uncertainty.