Background: Innovation is an important aspect of business today. It is important for companies to be innovative in order to stay competitive with their competitors. During the last couple of decades, technology has become more and more common both in our daily life, as well as in businesses. This has lead to an increase in technology implementation, especially within the service industry, where customers now can use self-service technologies in order to receive the service on their own. However, a lack of self-service technologies was discovered within the fast food industry. Since these types of innovations increased the service efficiency and decreased the waiting-time for customers, the authors believed that this would be very interesting for local managers within the fast food industry. Therefore, the authors began to investigate how much power local management has over these types of new innovations.

Purpose: The purpose of this thesis is to explore how local management affects the innovation process, within fast food restaurant chains.

Method: By conducting a cross-case study with the two fast food companies Subway and Max, the authors interviewed local fast food managers in order to explore the effect local management have on the innovation process. These two cases were selected since Subway fully consists of franchisees, while Max is almost completely company owned. Therefore, the two most common organizational structures within the fast food industry are included which will provide a more fair view of the industry.

Conclusion: The effect of the innovation process has a positive relationship with the amount of power distributed to the local management. However, these areas differ depending on the organizational structure, with franchisees achieving their highest amount of power within medium-sized innovations and managers in company-owned outlets maintain their highest amount of power within minor innovations. Even though the overall communication was perceived as satisfying and efficient, large opportunities for improvements occur. By implementing more horizontal communication within the local management, it is in the belief of the authors that the entire internal communication will benefit. Especially this would benefit the franchise system where an increased local communication and collaboration would lead to more efficient communication throughout the entire organization.