Bumiputera franchisees retention in Malaysia franchising industry: the moderating effect of government support

Franchising business plays an important role in enhancing Malaysia’s economic and social growth as it assists to develop and nurture Bumiputera entrepreneurs. However, recently,
franchising business is not growing as expected as more local franchising businesses are confronting business termination or ceased operations problems. Therefore, Bumiputera franchisees retention is crucial to ensure franchise business continuity and long-term business success. Furthermore, previous researchers accentuated the relationships between franchisor support, franchisor brand and franchisor franchise system and franchisees retention in the franchising business. Hence, this study examines the relationship between franchisor support, franchisor brand, franchisor franchise system and Bumiputera franchisees retention in the Malaysia franchising business. The study also examines the moderating effect of government support. The sequential explanatory mixed method was used. Data was collected through a survey and interviews. A hundred and twenty-five Bumiputera franchisees were involved for the quantitative phase, whilst for the qualitative phase, semi-structured interviews were conducted on six Bumiputera franchisees to further explain the result of the quantitative statistical analysis. Overall, the finding indicated that franchisor support, franchisor brand, franchisor franchising
system, government support and Bumiputera franchisees retention were significantly related. However, only the franchisor franchise system significantly predicted Bumiputera franchisees retention while other variables did not. In fact, the result also identified that government support was irrelevant and did not play moderating role in contributing towards Bumiputera franchisees’ retention. Hence, in order to ensure business franchise retention, it is important for the franchisor
to foster and nurture an effective franchisor franchise system. Furthermore, it is essential for government to frequently review the supports in at least three to five years to ensure effective and successful outcomes especially to franchisees. Finally, this study has gave future research opportunities to explore into more specific area such indexes or dimensions in each study variable.