The role of performance measures in the fast food franchisee industry to sustain positive growth : Cape Metropole - South Africa

Abstract

The Faculty of Business at the Cape Peninsula University of Technology conducts research in the niche area: “The Effective Management of SMMEs” as identified by the National Research Foundation of South Africa.

The research contained within the ambit of this thesis, has as its objective to establish the current position of performance measures utilised daily in the business activities by fast food franchisees, to raise awareness of future performance drivers (i.e. the critical success factors or non-financials aspects), and to highlight the importance of measuring the key performance areas of both financials and non-financial indicators as significant contributors to sustainability and growth of an enterprise.

The challenge managers is currently faced with pertain to the managing of businesses for results i.e. identifying the drivers of financial success, finding a balance to measure financial and non-financial performances, appraising and compensating people’s performance. Lacking such tools, businesses have encountered difficulties managing what they could not describe or measure, or that are exposed to the risk of failure. Financial accounting (historic information) does not provide details about factors that actually help grow market share and profits (the main drivers of future performance).

The questions which should be asked, are: Are the managers of fast food franchisees able to identify critical information or articulate factors that are important to actually help grow market share and profits? What tools are utilized to measure and drive value in real-time? To what level is performance measured, and what is the role and purpose of the utilised measures in the fast food franchisees? Most importantly, to what extent are franchisees in the fast food industry equipped by franchisors through a franchise “package”? This remains problematic as the need to identify and understand information critical for decision making in the fast food industry becomes imperative for the growth and sustainability of the organization. To answer these questions, the performance measures actually used by franchisees, will be surveyed.

The proposed study will involve the collection, compilation, and analysis of both financials and non-financials performance measures using survey data from fast food franchisees within the Cape Metropolis. Quantitative data will be collected through opened and closed ended questionnaires (distributed to owners/managers of outlets) to document the existing performance measures and resulting perceived benefits.

The outcome of this thesis will help franchisees to identify critical success factors and raise awareness with franchisors on inadequacies in the franchise package, so as to contribute to the effective management of small businesses. Furthermore, the research will be of importance in empowering the fast food sector to take advantages of alternative performance measures, improve their business efficiencies and increase their capacity to grow and be sustainable.