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This study contributes to research and practice through the theoretical development and empirical investigation of the role of IT use in organizational learning. We empirically examined the relationship between internal IT use, knowledge transfer effectiveness, absorptive capacity, and franchisee performance on a sample of 783 independently owned franchisees using a comprehensive dataset comprised of both primary and secondary data. The overall results indicate support for the argument that IT use impacts knowledge transfer effectiveness, and absorptive capacity, and that the influence of IT use on firm performance is completely mediated by absorptive capacity. The results are stable across the choice of statistical method and the operationalization of financial performance. Our findings suggest that IT use is an important learning mechanism that enables knowledge outcomes and dynamic capabilities within franchisees. Firms need to recognize these impacts of IT use in order to leverage IT to its fullest extent. This might be more important than ever before, given the rapidly changing business environments and investments in IT-based systems to manage knowledge resources. We hope that the findings of this study encourage the continued examination of the role that IT plays in organizational learning, and the outcomes of such learning.