The Relationship Between Network Characteristics and Organizational Performance in the Chinese Franchise System

In today's fiercely competitive market environment, the franchise system has emerged as a vital strategy for firms seeking expansion. While traditional studies on franchise systems have focused primarily on the relationship between franchisors and franchisees or the interaction between the system and external environments, this study highlights the often-overlooked inter-franchisee network. As franchisees interact beyond contractual boundaries, they form a complex web of cooperation, information sharing, and at times, internal conflict. Issues such as information asymmetry, lack of trust, and opportunistic behaviors are increasingly observed among franchisees, particularly in the context of resource allocation, market overlap, pricing strategies, and brand management. These conflicts can lead to performance discrepancies and internal dissatisfaction. To address these challenges, this study applies Social Network Theory (SNT) to analyze the structural characteristics of inter-franchisee networks within Chinese franchise systems. By examining how these network attributes influence organizational performance, the research aims to offer both theoretical insights and practical implications for managing internal franchise networks more effectively.