Resumo

The year 2020 will make history by the spread of COVID-19, generating a global crisis. In this context, the effects on business models are presented as study opportunities. Startups are interesting objects of analyse in this scenario, their dynamism and ability to change can be presented as advantages, while their financial immaturity can represent a risk for survival. One possible question is what are the effects of the franchise decision for startups in this context, since the conversion to this business model can represent a loss of dynamism and ability to change in these businesses.

The objective is address how franchise startups have been facing the crisis caused by COVID-19, with greater emphasis on the effects of the franchising decision on the survival of this type of business during the crisis. A set of propositions about the startup franchising process and the effects of a systemic crisis for companies that adopt this operating model were outlining as well as a descriptive diagram of this process.

The theorical framework is composed for three parts: financial sustainability of startups; motivations for the franchising decision; and the concept of crisis and its management. In the first, are presented the funding pattern of startups in a normal contexto (crowdfunding, angel investors and startups accelerator programs). In the second, are presented the main theories about the franchising decision (Resource Scarcity Theory and Agency Theory). Lastly, the third presentes the literature that addresses the crisis issue, both in a general context and in the specific context of COVID-19.

This research was conducted using a qualitative research methodology performed by multiple case studies. Were selectioned brazilian startups (registered in the Associação Brasileira de Startups) that operate through franchised units. The data collection involved interviews with representatives of each of the selected companies. As a technique for analyzing the obtained information, a content analysis was performed. Information gathered with the interviews was triangulated with data obtained from the websites and social networks of each of the brands.

Two of the analyzed startups opted for a conventional franchise model, while the others opted for a micro-franchise model. In general, there was a quick response from all startups to the crisis scenario, a decisive aspect for the survival of this type of business in a period of turbulence. All interviewees presented actions taken during this period that reflect the importance of resilience to overcome the challenges faced, especially through pivoting capabilities.

One first conclusion refers to the maintenance of agility and flexibility of the studied businesses despite the operation through franchised units. It was possible to conclude that startups can opt for two franchise models: conventional franchises or micro-franchises. The first model enables franchise startups to gain, to a greater extent, benefits from their franchisees within a crisis context when compared with the second model. Despite this situation, all the analyzed businesses have been delivering consistent performances even in the crisis contexto.

Kuckertz, A.; et al. (2020), “Startups in times of crisis–A rapid response to the COVID-19 pandemic”, Journal of Business Venturing Insights, Vol. 13, e00169. Williams, T. A.; et al. (2017), “Organizational response to adversity: Fusing crisis management and resilience research streams”, Academy of Management Annals, Vol. 11, No. 2, pp.733-769. Diaz-Bernardo, R. (2012), “An analysis of three confronting theories to explain franchising supply”, Journal of Business & Economics Research (JBER), Vol. 10, No. 3, pp.167-170