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Franchisee satisfaction in a franchise network has various consequences, from stimulating the implementation of new practices up to the decision to stay in or leave the network. This paper aims to examine the performance antecedents of overall franchisee satisfaction. We posit that satisfaction is influenced by three performance dimensions: financial, service, and relationship performance. We argue that increasing performance on any of these three dimensions leads to higher franchisee satisfaction. Based on a sample of franchisees from Germany and Austria, the findings show that relationship performance (quality) consistently predicts changes in satisfaction and mediates the effect on satisfaction of the other important performance factor – financial performance relative to competitors. Overall, this study contributes to the franchising and retail literature by applying Cyert and March’s performance feedback theory to explain overall franchisee satisfaction.

Determinants of overall franchisee satisfaction: application of the performance feedback theory