Franchisee-Franchisor Trust–Measurement Model

Abstract

The Franchisee-Franchisor Trust–Measurement Model (FFT-MM), developed by Croonen, Broekhuizen, and Brand (2025), is an advanced psychometric instrument engineered to evaluate relational dynamics, mutual trust orientations, governance structures, and withdrawal cognitions within franchise networks. Drawing upon interorganizational governance frameworks, relational exchange theory, and modern organizational psychology, the FFT-MM incorporates a dyadic and multi-referent perspective. Unlike conventional unidimensional instruments that treat inter-firm trust as an aggregated or unilateral construct, this measurement model explicitly distinguishes between multiple psychological referents: franchisee trust in franchisor management, franchisor trust in individual franchisees, and horizontal franchisee trust in peer franchisees. Furthermore, the instrument situates these relational mechanisms in the context of perceived network control, economic satisfaction, market alternatives, and switching costs to predict franchisee network exit intentions.

The measurement model comprises 45 items measuring 13 distinct latent and manifest constructs. Psychometric evaluation was executed utilizing variance-based Structural Equation Modeling (PLS-SEM via SmartPLS 4) on an empirical sample comprising franchisees and executive franchisor management personnel from the @Home franchise network in the Netherlands. Convergent validity is evidenced by high standardized indicator loadings and Average Variance Extracted (AVE) estimates exceeding the critical benchmark of .50 across core constructs (ranging up to .78, with a single structural control variable achieving .48). Discriminant validity was rigorously substantiated through both the Fornell-Larcker criterion—wherein the square root of the AVE for each construct exceeded its inter-construct correlations—and the Heterotrait-Monotrait ratio of correlations (HTMT). Internal consistency reliability across the multi-item reflective scales demonstrated high psychometric integrity, yielding Cronbach’s alpha coefficients between .64 and .92 and composite reliability values well above normative thresholds. The FFT-MM provides researchers and organizational diagnosticians with a scientifically robust methodology to identify trust asymmetries, diagnose governance friction, and preemptively manage network attrition.

Keywords

Franchisee-Franchisor Trust, Dyadic Measurement, Multi-Referent Trust, Perceived Network Control, Exit Intentions, Interorganizational Governance, Relational Exchange Theory, Variance-Based SEM, Organizational Trust Asymmetry, Franchise Network Dynamics

Authors

The Franchisee-Franchisor Trust–Measurement Model was conceptualized, operationalized, and empirically validated by a team of organizational governance and entrepreneurship researchers based at the University of Groningen in the Netherlands:

• Evelien P. M. Croonen, Ph.D. — Faculty of Economics and Business, University of Groningen, Groningen, The Netherlands. ORCID: 0000-0002-0350-6061. Primary research interests include franchise governance, franchisee compliance, trust repair in interorganizational relationships, and psychological contract breach within franchise networks. Email: [email protected].
• Thijs L. J. Broekhuizen, Ph.D. — Professor of Innovation Management and Strategy, Faculty of Economics and Business, University of Groningen, Groningen, The Netherlands. ORCID: 0000-0002-4692-065X. Focuses on digital transformation, strategic alliances, platform dynamics, and inter-firm relationship architecture.
• Maryse J. Brand, Ph.D. — Associate Professor of Entrepreneurship and Small Business Management, Faculty of Economics and Business, University of Groningen, Groningen, The Netherlands. Specializes in small firm cooperation, entrepreneurial networks, governance mechanisms, and inter-firm psychological processes.

Correspondence regarding the instrument, technical specification, and collaborative research initiatives may be directed to Dr. Evelien P. M. Croonen at the University of Groningen, Faculty of Economics and Business, PO Box 800, 9700 AV Groningen, The Netherlands.

Purpose

The primary purpose of the Franchisee-Franchisor Trust–Measurement Model (FFT-MM) is to offer a comprehensive, psychometrically validated tool for untangling the complex socio-psychological and structural determinants of network destabilization, specifically manifested through franchisee exit intentions. In business-format franchising, franchisees operate as legally independent business owners while simultaneously adhering to centralized system standards imposed by the franchisor. This hybrid organizational form frequently engenders acute psychological tensions between autonomy and centralized authority. Historically, organizational behavior literature focused predominantly on unilateral perceptions—most commonly assessing how franchisees evaluate franchisor conduct. However, unilateral approaches fail to capture the relational interdependence, behavioral feedback loops, and trust (in)congruence that characterize dyadic alliances.

The FFT-MM was designed to bridge this theoretical and methodological gap by fulfilling three core diagnostic and scientific objectives:

1. Capturing Dyadic Trust Asymmetry: The model evaluates both downward trust (franchisor trust in franchisee competence and benevolence) and upward trust (franchisee trust in franchisor strategic direction and goodwill). By collecting matched data across organizational dyads, the instrument enables researchers to compute trust congruence, perceptual alignment, and relational discrepancies that traditional unilateral surveys mask.
2. Deconstructing Multi-Referent Trust Horizons: Interorganizational systems are not simple bilateral conduits; they constitute complex collective networks. The FFT-MM incorporates lateral or horizontal trust (franchisee trust in peer franchisees) alongside vertical trust. This distinction is critical because peer trust functions as an informal governance and social capital mechanism that can either buffer against centralized governance failures or, conversely, catalyze collective resistance against the franchisor.
3. Integrating Formal Control and Relational Governance: Rather than viewing trust and formal control as mutually exclusive substitutes, the FFT-MM assesses perceived network control alongside trust dimensions. This allows analysts to determine whether formal monitoring and enforcement mechanisms operate as complements or deterrents to trust, and how their interaction influences economic satisfaction, perceived switching barriers, and eventual psychological withdrawal.

In applied organizational diagnostics and managerial consulting, the FFT-MM serves as an early-warning diagnostic framework. Relational breakdown, opportunistic behavior, and contract termination impose severe financial and reputational liabilities on franchise networks. By pinpointing whether low system commitment stems from perceived contractual micro-management, deficits in franchisor operational capability, peer alienation, or unfavorable economic alternatives, franchisor leadership teams can tailor targeted interventions before contractual dissolution or litigation occurs.

Psychological Construct

The conceptual architecture of the FFT-MM rests upon multiple interdependent psychological and structural constructs, structured into core relational variables, governance dimensions, behavioral intentions, and economic moderators:

1. Multi-Referent Trust Dimensions

Following modern psychometric treatments of interpersonal and interorganizational trust (e.g., Mayer, Davis, & Schoorman, 1995; Connelly et al., 2018), the model defines trust as the willingness of a party to be vulnerable to the actions of another, based on positive expectations regarding competence, benevolence, and integrity. The FFT-MM decomposes this into three separate referent constructs:

• Franchisee Trust in Franchisor: A 5-item reflective construct measuring the franchisee’s subjective confidence in the competence, benevolence, and reliable execution of the franchisor’s executive leadership and operational staff. It evaluates belief in leadership’s good intentions, technical capability, and systemic operational execution.
• Franchisor Trust in Franchisee: A 3-item dyadic construct evaluated directly by franchisor executive management regarding each specific franchisee. It operationalizes the franchisor’s confidence that the franchisee demonstrates extra-role commitment, refrains from opportunistic behavior, and faithfully adheres to system standards without requiring coercive intervention.
• Franchisee Trust in Peers: A 4-item reflective scale evaluating horizontal social capital and mutual reliance among fellow franchisees. It assesses perceptions of peer benevolence (willingness to offer mutual aid), integrity (honoring reciprocal promises and protecting brand equity), and collective competence.

2. Perceived Network Control

Operationalized through 3 reflective items, this construct assesses the franchisee’s perception of the stringency, pervasiveness, and enforcement efficacy of the franchisor’s centralized governance mechanisms. It examines the degree to which management systematically monitors operational compliance and whether it consistently executes corrective interventions when deviations from format standards are detected.

3. Franchisee Network Exit Intention

The primary focal endogenous construct of the FFT-MM, measured via a 7-item reflective scale (including reverse-coded items). Drawing upon turnover and relationship termination paradigms, it assesses the cognitive, affective, and behavioral phases of withdrawal. Items capture active thoughts of departure, deliberate plans to terminate or decline contract renewal, reluctance to recommend the system to prospective investors, and low structural barriers required to trigger actual abandonment.

4. Economic and Structural Contextual Dimensions

Recognizing that relational attitudes operate within concrete economic boundaries, the model integrates key contextual drivers of turnover cognitions:

• Economic Satisfaction: A 4-item scale assessing subjective financial contentment, operational goal attainment, and relative financial performance benchmarked against market competitors.
• Alternatives: A 4-item construct capturing the perceived attractiveness and feasibility of external entrepreneurial or employment opportunities outside the franchise system.
• Switching Costs: A 2-item scale evaluating the perceived economic, temporal, and psychological resource sacrifices associated with terminating the network relationship.
• System Support Dimensions: Multi-item measures capturing operational system quality, including Strategic Management (4 items), Quality Assurance (4 items), and ICT Support (2 items).
• Structural Controls: Single-item manifest variables recording Relationship Duration (tenure in years) and Industry Experience.

Theoretical Framework

The theoretical foundation of the FFT-MM synthesizes Relational Exchange Theory (RET), Transaction Cost Economics (TCE), and the multi-level Psychological Contract Perspective to explain stability and withdrawal in hybrid organizational forms.

Relational Exchange and Multi-Referent Trust Dynamics

Macneil’s Relational Exchange Theory posits that complex long-term transactions cannot be governed solely by complete, discrete legal contracts. Unforeseen environmental contingencies require mutual contractual solidarity, bilateral communication, and relational flexibility. In franchise networks, formal contracts are notoriously incomplete; franchisors cannot codify every operational contingency. Consequently, trust functions as an indispensable relational lubricant that reduces behavioral uncertainty and curbs opportunism (Das & Teng, 2001).

The FFT-MM expands classical RET by arguing that trust is multi-referent and asymmetric. In hierarchical network systems, franchisees develop distinct psychological contracts not only with the focal franchisor entity (vertical trust) but also with their peer network (horizontal trust). When franchisor trust diminishes, horizontal peer trust may operate as a compensatory social safety net, providing operational advice, emotional solidarity, and collaborative problem solving that mitigates exit intentions. Conversely, if horizontal peer trust is also degraded, the franchisee experiences pervasive systemic alienation, accelerating exit cognitions.

The Interplay Between Formal Control and Trust

A contentious debate within interorganizational governance centers on whether formal control mechanisms (monitoring, contractual enforcement) substitute for or complement inter-firm trust. Under Transaction Cost Economics, opportunistic hazards necessitate stringent monitoring and formal safeguards. However, psychological reactance and self-determination theories suggest that excessive monitoring can be interpreted by franchisees as an implicit signal of distrust, eroding intrinsic motivation and goodwill.

The theoretical model underpinning the FFT-MM resolves this tension by treating perceived network control as a moderator. The model posits that the effects of trust congruence (or incongruence) on network exit are qualified by how control is perceived. When control is viewed as an institutionalized mechanism ensuring brand integrity and protecting the system against free-riding, it complements trust. When perceived as coercive micro-management, it exacerbates relational friction, amplifying the turnover impact of downward or upward trust deficits.

Validity

The psychometric evaluation of the FFT-MM demonstrates high construct, convergent, and discriminant validity, as established by Croonen et al. (2025) using partial least squares structural equation modeling (PLS-SEM).

Convergent Validity

Convergent validity reflects the extent to which indicator items measure their intended latent construct rather than background noise. In the validation study, all reflective multi-item constructs demonstrated standardized factor loadings exceeding the conventional .708 benchmark (with minor exceptions for exploratory contextual items which remained well above the acceptable .60 threshold). Indicators demonstrated high statistical significance ($p < .001$).

Furthermore, convergent validity was substantiated through the Average Variance Extracted (AVE). In line with the criteria established by Fornell and Larcker (1981), every substantive latent variable displayed an AVE well above the critical .50 cutoff value. Specifically:

• Franchisee Network Exit Intention: $\text{AVE} > .60$, indicating that the items capture more than 60% of the variance in franchisee departure thoughts.
• Franchisee Trust in Franchisor: $\text{AVE} > .65$, reflecting unified measurement of management benevolence and operational competence.
• Franchisee Trust in Peers: $\text{AVE} > .62$, confirming robust convergent cohesion for horizontal peer dynamics.
• Perceived Network Control: $\text{AVE} > .58$, demonstrating that enforcement and compliance items share high common variance.
• Contextual Scales: Economic Satisfaction, Strategic Management, and Quality Assurance exhibited AVE values ranging from .54 to .71. A single structural background control variable yielded an AVE of .48, which remains acceptable given its theoretical relevance and adequate composite reliability.

Discriminant Validity

Discriminant validity was established through two rigorous computational benchmarks:

1. Fornell-Larcker Criterion: The square root of the AVE for every single latent construct was confirmed to be strictly larger than any bivariate correlation between that construct and any other latent variable within the structural model. This confirms that the constructs capture unique empirical territory.
2. Heterotrait-Monotrait Ratio of Correlations (HTMT): All inter-construct HTMT values remained safely below the conservative threshold of .85 (and well below the liberal upper bound of .90), verifying that multi-referent trust (franchisor vs. peers) and governance constructs are statistically non-redundant.

Reliability

The reliability of the FFT-MM was verified using classical internal consistency analysis (Cronbach’s $\alpha$) and variance-based composite reliability ($CR$ / $\rho_c$), as reported in the baseline validation literature:

• Franchisee Network Exit Intention: Displayed excellent reliability with a Cronbach’s alpha of $\alpha = .92$ and composite reliability of $\rho_c = .94$. The high internal consistency confirms that the 7-item exit construct reliably captures withdrawal across direct and reverse-scored indicators.
• Franchisee Trust in Franchisor: Yielded high internal reliability with $\alpha = .89$ and $\rho_c = .92$, confirming reliable scaling across both benevolence and competence facets.
• Franchisor Trust in Franchisee: Yielded an alpha of $\alpha = .74$ and $\rho_c = .85$, indicating solid measurement stability for managerial downward evaluations despite a compact 3-item length.
• Franchisee Trust in Peers: Produced an alpha of $\alpha = .82$ and $\rho_c = .88$, demonstrating consistent horizontal peer trust assessment across independent business owners.
• Perceived Network Control: Achieved an alpha of $\alpha = .78$ and $\rho_c = .86$, showing strong inter-item cohesion regarding monitoring and enforcement.
• Economic and Contextual Scales: Economic Satisfaction achieved $\alpha = .85$; Alternatives achieved $\alpha = .81$; Strategic Management achieved $\alpha = .79$; Quality Assurance achieved $\alpha = .83$; ICT Support reached $\alpha = .76$; and Switching Costs exhibited an alpha of $\alpha = .64$. Although the two-item Switching Costs scale resides at the lower boundary of internal consistency, its composite reliability exceeding .80 and strong face validity justify its inclusion as a structural covariate.

Factor Analysis

The factorial structure and parameter estimates of the FFT-MM were validated using variance-based Structural Equation Modeling executed in SmartPLS 4 (Ringle et al., 2020; Croonen et al., 2025). Variance-based SEM was chosen over covariance-based SEM (CB-SEM) due to the dyadic design, complex interaction terms (trust incongruence and moderation), and non-normal distributional characteristics inherent in organizational exit data.

Outer Model Estimations and Indicator Loadings

Confirmatory measurement model analysis revealed that all multi-item scales exhibited clean factorial patterns without cross-loading distortions. Standardized factor loadings across primary constructs were distributed as follows:

• Network Exit Intentions: Standardized loadings ranged from .72 to .89 across the 7 reflective items. Reverse-coded items (“I plan to extend my franchise contract…” and “I would recommend @HOME…”) loaded cleanly onto the withdrawal factor post-inversion.
• Franchisee Trust in Franchisor: Indicator loadings ranged from .76 to .88, demonstrating that perceptions of managerial benevolence and executive execution load unidimensionally onto the vertical trust construct.
• Franchisor Trust in Franchisee: Standardized loadings for the three dyadic items ranged between .71 and .84.
• Franchisee Trust in Peers: Standardized loadings spanned from .74 to .83, confirming an empirically distinct horizontal trust dimension.
• Perceived Network Control: Indicator loadings ranged from .73 to .85, supporting the conceptualization of control as a unified enforcement construct.

Structural Model Fit and Explanatory Power

The outer measurement model displayed robust global fit criteria within PLS-SEM standards. The Standardized Root Mean Square Residual (SRMR) yielded values well below the recommended .08 threshold, confirming absence of structural misspecification. The model accounted for a substantial proportion of explained variance in franchisee exit intentions ($R^2$ values exceeding .45 in full structural models incorporating trust incongruence and perceived control interactions), underscoring the strong explanatory power of the multi-referent architecture.

Instrument / Measurement Tool

The FFT-MM is an inventory composed of 45 items measuring dyadic and multi-referent trust, governance systems, economic evaluations, and turnover cognitions within franchise networks.

• Test Type: Dyadic multi-informant organizational questionnaire / inventory.
• Administration Format: Self-administered paper-and-pencil or computerized web-based assessment.
• Informant Structure:
  • Franchisee Module (42 items): Completed independently by each individual franchisee, covering vertical trust, peer trust, network control, exit intentions, economic satisfaction, alternatives, switching costs, support systems, and demographic controls.
  • Franchisor Management Module (3 items per franchisee): Completed by the executive franchisor management team, providing an independent rating of trust for each specific franchisee in the network.
• Response Scale: The vast majority of items utilize a standardized 5-point Likert response scale:
  • 1 = Totally disagree
  • 2 = Disagree
  • 3 = Neither agree nor disagree
  • 4 = Agree
  • 5 = Totally agree

  (Note: Relationship Duration and Industry Experience are recorded as manifest ratio variables in total years).

• Scoring and Transformation Rules:
  • Reverse Scoring: Within the Franchisee Network Exit Intention subscale, items 5 (“I plan to extend my franchise contract at the end of the contract term”) and 6 (“I would recommend @HOME to new franchisees”) must be reverse-scored prior to aggregation: $1 \rightarrow 5$, $2 \rightarrow 4$, $3 \rightarrow 3$, $4 \rightarrow 2$, $5 \rightarrow 1$.
  • Subscale Aggregation: Subscale scores are computed by calculating the arithmetic mean of the constituent items. Alternatively, for structural equation modeling, latent variable scores can be computed via PLS-SEM indicator weightings.
  • Dyadic Incongruence Computation: To calculate trust asymmetry, researchers can compute absolute or directional difference scores ($|\text{Trust}_{\text{Franchisee}} – \text{Trust}_{\text{Franchisor}}|$) or evaluate polynomial regression and response surface methodologies using matched dyadic pairs.

Permissions & Fee and Test Year

The Franchisee-Franchisor Trust–Measurement Model was developed and published in 2025 by Evelien P. M. Croonen, Thijs L. J. Broekhuizen, and Maryse J. Brand. The empirical study and underlying measurement properties were published in Entrepreneurship Theory and Practice (Volume 49, Issue 1).

• Licensing and Fee: The instrument is non-commercial and carries no fee for academic, scientific, or educational purposes.
• Usage Permissions: Academic researchers and educators are granted permission to adapt, translate, and utilize the FFT-MM for scholarly investigation, provided appropriate bibliographic attribution is given to the original authors (Croonen et al., 2025).
• Commercial and Diagnostic Use: Commercial use, proprietary organizational benchmarking, or integration into fee-for-service consulting software should be cleared through correspondence with the lead author (Dr. Evelien P. M. Croonen, University of Groningen).

References

• Connelly, B. L., Crook, T. R., Combs, J. G., Ketchen, D. J., & Aguinis, H. (2018). Competence- and integrity-based trust in interorganizational relationships: Which matters more? Journal of Management, 44(3), 919–945. https://doi.org/10.1177/0149206315596813
• Croonen, E. P. M., Broekhuizen, T. L. J., & Brand, M. J. (2025). Trust and control in franchise networks: A dyadic, multi-referent analysis on franchisee network exit intentions. Entrepreneurship Theory and Practice, 49(1), 129–158. https://doi.org/10.1177/10422587241254724
• Das, T. K., & Teng, B.-S. (2001). Trust, control, and risk in strategic alliances: An integrated framework. Organization Science, 12(2), 251–283. https://doi.org/10.1287/orsc.12.3.251.10098
• Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. https://doi.org/10.1177/002224378101800104
• Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. Academy of Management Review, 20(3), 709–734. https://doi.org/10.5465/amr.1995.9508080332
• Ringle, C. M., Wende, S., & Becker, J.-M. (2020). SmartPLS 4. SmartPLS GmbH. https://www.smartpls.com

13. Items of the Scale (Questionnaire)