DETERMINANTS OF COMPANY EFFICIENCY PERFORMANCE IN FRANCHISE INDUSTRY

Abstract

The purpose of this study is to investigate the determinants of company efficiency performance in franchise industry from Malaysian public listed companies. Efficiency is the most important pillar for a company’s long-term survival. Despite the fact that efficiency is one of the primary goals of any organizations, the elements that influence efficiency in franchises have gotten little attention. The failure rates of franchising businesses in Malaysia may be even riskier due to poor management of efficiency performance. Thus, this research is based on an empirical investigation of three independent factors to see how they are related to efficiency. Return on asset, return on equity, and asset turnover are the three variables. Using Thomson Reuters Eikon, data was extracted from the annual reports of four franchise businesses listed on Bursa Malaysia from 2011 to 2020 period of study. STATA 14 Software was used to examine the data. The selected four franchise companies were chosen because they are listed in the top-ranked under franchise industry in Malaysia. Fixed Effect with cluster option is suggested as a regression model. Based on the findings, both asset turnover and return on equity have a significant association with efficiency. Meanwhile, return on asset has no meaningful relationship with efficiency. This study is crucial to the businesses which it can improve return on asset and revenue without increasing the asset expenditures as well as minimizing costs. Increased profit margins can also aid in the preservation of a company's return on equity. In fact, the company also can boost its asset management by selling non-profitable assets.