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One empirical phenomenon that has received little attention in the franchising literature is the tendency for individual franchisees to own not just one but several units of a given franchised chain. Most current theories of franchising, based on incentives, information asymmetries, and strategic arguments, have little capacity to explain this phenomenon. In fact, several of them imply that all units should be independently owned and operated. However, given the existence of multi-unit owners, most of the theories have implications for the extent to which units owned by a single owner should be 1) geographically near each other, 2) located in areas where populations display similar demographic characteristics, and 3) contiguous to each other, that is, should share a market boundary. This paper provides empirical evidence that restaurants of individual owners in the six largest fast-food chains in Texas are geographically close to each other, that they are located in areas with similar demographic characteristics, and that they are contiguous. This evidence suggests among other things that franchising is not a strategic delegation device, and that the location of units is not determined by the franchisee's desire to diversify away risk. Instead, the minimization of monitoring or free-riding costs, and the franchisor's reliance on the franchisee's local market expertise, appear to be central concerns in the allocation of units across franchisees
This 2005 book describes in much detail both how and why franchising works. It also analyses the economic tensions that contribute to conflict in the franchisor-franchisee relationship. The treatment includes a great deal of empirical evidence on franchising, its importance in various segments of the economy, the terms of franchise contracts and what we know about how all these have evolved over time, especially in the US market. A good many myths are dispelled in the process. The economic analysis of the franchisor-franchisee relationship begins with the observation that for franchisors, franchising is a contractual alternative to vertical integration. Subsequently, the tensions that arise between a franchisor and its franchisees, who in fact are owners of independent businesses, are examined in turn. In particular the authors discuss issues related to product quality control, tying arrangements, pricing, location and territories, advertising, and termination and renewals.
The literature on franchising has largely ignored one of its distinguishing features: the ownership of multiple units by a single franchisee. Based on the findings of an in-depth field study, this article argues that multi-unit franchisees outperform single unit franchisees in meeting several important management challenges facing chain organizations, which helps explain the prevalence of this form of franchising.
The literature on franchising has largely ignored one of its distinguishing features: the ownership of multiple units by a single franchisee. Based on the findings of an in-depth field study, this article argues that multi-unit franchisees outperform single unit franchisees in meeting several important management challenges facing chain organizations, which helps explain the prevalence of this form of franchising.
Franchise Your Growth Expert franchise consultant Mark Siebert delivers the ultimate how-to guide to employing the greatest growth strategy ever—franchising. Siebert tells you what to expect, how to move forward, and avoid costly mistakes as he imparts decades of experience, insights, and practical advice to help grow your business exponentially through franchising. Learn how to: Evaluate your existing businesses for franchisability Identify the advantages and disadvantages of franchising Develop a business plan for growth on steroids Evaluate legal risk, obtain necessary documents, and protect intellectual property Create marketing plans, build lead generation, and branding for a new franchise Cultivate the franchisee-franchisor relationship
An Introduction to Franchising is a concise yet comprehensive guide to the world of franchising. Looking at the field from the perspectives of the franchisor and the franchisee, the book offers a good balance between the theories behind good franchising practise, and hands-on practical guidance. Applied theory is evident in the broad range of real-life case studies included in the book. With many of the world's leading companies operating franchise models, this book will offer readers a genuine insight into the potential advantages and disadvantages of franchising. The book also examines the financial, legal and ethical implications of franchising, whilst anticipating future concerns and challenges for the franchising model. An Introduction to Franchising is an essential guide for all students of franchising, entrepreneurship and marketing. It is also a must-read for anyone wishing to start their own franchise business.
Franchising networks are experiencing great success in international business organization. Few books try to explain the characteristics of these networks. Contrary to the existing literature this book tackles more theoretical problems related to governance, organization, knowledge management, contract design, incentive and regulation issues both from the economic and management view point. It delivers new theoretical and empirical results regarding plural forms, contract design, and knowledge and strategic management issues. Its purpose is to offer researchers and practitioners new theoretical and empirical insights in one of the most important economic phenomenon at the beginning of the 21st century: Franchising networks as organizational arrangement for growth and internationalization of firms.
This book presents a range of chapters dealing with current issues of interest to franchising researchers and practitioners. From authors who have been especially active in the area of franchising research, the chapters represent contributions from the Society of Franchising, the only international special interest research group totally devoted to franchise research. The chapters reflect a balance of structural and behavioral issues relevant to franchising. They span the spectrum from technical, methodological subjects to highly applied, practitioner-oriented chapters, giving a sense of breadth to the subject matter. Franchising researchers and practitioners and marketing academicians can begin to incorporate this volume’s information on: problem of quality data on franchising-related matters territorial encroachment and the potential for cannibalization and conflict master franchising and system growth multi-unit franchising and system performance advertising fees issues linkages between franchisor-franchisee relationship quality and service quality franchising as a unique form of organizational governance setting measurement of franchise relationship quality and exchange norms franchisees’role expectations as entrepreneurs and managers competition issues concerning franchisees, company units, and independent businesses All involved in the franchising industry would do well to peruse this timely collection which explores all facets of the current state of franchising growth and distribution.