The Moderating Role of Regulatory Frameworks in Shaping Franchise Brand Equity: A Conceptual Exploration

Abstract

Franchise brand equity is a critical driver of customer loyalty, franchisee satisfaction, and overall competitiveness in the franchise market. This paper explores the influence of regulatory frameworks on the development of franchise brand equity, an area that remains underexplored in current literature. While much research focuses on internal drivers of brand value, less attention has been given to how external institutional factors, such as laws and regulations, moderate these internal dynamics. To address this gap, a conceptual model is proposed, examining the interrelationships between leadership engagement, franchisee engagement, and franchise brand equity, grounded in Agency Theory, Social Exchange Theory, and Engagement Theory. This model positions regulatory mechanisms as either enablers of trust and stability or constraints when overly rigid. The study offers practical strategies for franchisors, including compliance-oriented leadership, transparent governance, and digital regulatory alignment. It underscores the importance of balanced, innovative-friendly regulatory environments. Future research is encouraged to empirically test the model, explore cross-cultural comparisons, and consider other influencing factors such as technological change, cultural contexts, and market dynamics. These directions can offer actionable insights for academics, policymakers, and practitioners in designing regulatory frameworks that support rather than hinder brand growth.