5. Discussion
The selection of suitable franchisees is vital to the success of franchise systems (Watson, 2008) and franchisors can use franchisee selection criteria as a key input control to improve the outcomes of their future franchisees (Jambulingam & Nevin, 1999). In spite of the acknowledged importance of franchisee selection, minimal scholarly attention has been devoted to the relevant theory development, and published research in this area is sparse (Wang & Altinay, 2008; Clarkin & Swavely, 2006; Jambulingam & Nevin, 1999). The present study advances knowledge on the link between the franchise system's organizational identity and the franchisor's desire to select entrepreneurial franchisees. Our findings suggest that franchisors that have institutionalized entrepreneurial activity within the firm's systems and processes will seek entrepreneurial franchisees; that is to say, there is evidence to suggest that they will seek franchisees whose entrepreneurial values match their own. However, it is interesting to note that where franchisors adopted informal mechanisms to support entrepreneurial activities no statistically significant relationship with entrepreneurial franchisee recruitment was found. This may suggest that it is the formal mechanisms (rather than informal) which indicate a clear commitment to entrepreneurial values within the system. This finding can perhaps be explained by signaling theory. It is the formal mechanisms that can be observed, and thus through institutionalized support franchisors can signal their entrepreneurial values to both potential and current franchisees. Indeed, Lucia-Palacios, Bordonaba-Juste, Madanoglu, and Alon (2014) suggest that signaling firm values enables franchisors to attract appropriate franchisees.