Caught in the middle: franchise businesses and the social media wave Brian L. King Brian L. King is Assistant Professor of Management at HEC Montral, Montral, Canada. Introduction Franchising is an important and pervasive business system. Best known for hotels and fast-food restaurants, there are hundreds of types of business format franchises, from automobile repair shops to disaster recovery operations. In the USA there are over 750,000 franchised outlets that generate 750 billion dollars in sales Franchising is also showing strong growth internationally. The first modern business format franchise was developed by Howard Johnson in the 1930s, but rapid growth and popular acceptance began in the 1950s as cars led to unprecedented consumer mobility (Dicke, 1992). When confronted with unknown hotels and restaurants, travelers opted for trusted brands seeking a consistent experience rather than risking an uncertain local establishment. Many independent businesses folded in the face of the powerful franchising business system in which local entrepreneurs pay royalties to a franchisor and contribute their hard work and capital in exchange for a well-known brand and a proven operating system (Gillis and Castrogiovanni, 2012). Each franchise has its own specific business model (Magretta, 2002) based on the underlying concept, be it food preparation, auto repair or real estate, and supported by integrated key elements including a well-known brand, a sales and marketing system, a competitive pricing model and strong training systems (Gillis and Castrogiovanni, 2012). However, over the past 20 years, the advent of the Internet has impacted some of these elements, resulting in new challenges, particularly for certain types of franchises. Constantinides and Fountain (2008) denote two distinct eras of Internet innovation. The first can be characterized as transactional in that it enables sales over the Internet, in addition to unprecedented information availability. More recently. Web 2.0 heralded the second, the social era, enabling users-both businesses and consumers-to have an online presence and reputation. This article's thesis is that each of these Internet eras has seen two kinds of movements that it refers to as waves. The first of these it calls a surface wave, a highly visible innovation, but one that only influences a restricted set of franchises. The second is a more important deep wave that has a broader and more long-lasting influence on all franchises (King, 2015)[1]. This article examines the impact of social media, the most recent evolution of the Internet. on franchise business models. It takes a historical approach, reviewing the evolution of both franchising and the Internet since its advent 20 years ago. For researchers, this article reviews the literature related to these topics and identifies areas that merit further study. For practitioners in the franchising and large-scale distribution businesses, this article identifies important potential influences of social media to enable them ask relevant questions and i seek to adapt their business models to a changing environment.