Franchisor–franchisee supply chain cooperation: Sharing of demand forecast information in high-tech industries

In order to maintain their competitive edges in the market, high-tech firms cannot simply rely on superior technology alone. In addition, due to rapid technological changes, market demands in the high-tech industries have become volatile and difficult to forecast. This study proposes an option (i.e. franchising) that high-tech firms can use in order to expand their markets and improve firm performance. We also utilize a Bayesian forecasting methodology in order to address information sharing between the franchisor and franchisee. Our study demonstrates how high-tech franchising firms can benefit from information sharing of demand forecasts when franchising in order to enhance franchise performance. We also show that a profit sharing mechanism that results in optimal profits for the franchisor and franchisee. The study fills the research gaps that currently exist in the franchising literature and provides important managerial implications for practitioners in B2B markets.

► High-tech firms can employ franchising to expand their markets and improve firm performance.
► A Bayesian forecasting methodology is utilized to address information sharing between the franchisor and franchisee.
► Profit sharing mechanism can help the franchisor and franchisee achieve an optimal profit.