Decision Structures in Franchise Systems of the Plural Form

Arbeitspapier

Many successful franchise chains directly own a positive fraction of stores --- a structure referred to as plural form. We propose that this ownership structure is chosen as a commitment not to expropriate franchisees. The theoretical model is based on an empirical analysis of contract and interview data from the US fast-food sector and well known stylized facts: First, franchisees typically have strong contractual obligations to implement activities selected by the chain. Second, franchisees pay a revenue-based royalty to the chain. Therefore, the chain has incentives to select inefficient activities that yield high revenues but are too costly. If uniform standards require that activities must be the same in company-owned and franchise stores, a substantial fraction of company-owned stores works as a commitment device to select more efficient activities. The theoretical analysis further predicts that a strong contractual commitment to uniform standards is preferable if the fraction of company-owned stores is sufficiently high. This prediction is supported by our data.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Bonn Econ Discussion Papers ; No. 8/2008

Klassifikation und Themen

• Klassifikation: Wirtschaft
• Thema: franchising ; plural form ; contracts ; Franchising ; Franchise-Vertrag ; Eigentümerstruktur ; Entscheidung ; Spieltheorie ; Schnellgastronomie ; Theorie ; USA

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Kranz, Sebastian ; Lewin-Solomons, Shira B.
• Ereignis: Veröffentlichung
• (wer): University of Bonn, Bonn Graduate School of Economics (BGSE)
• (wo): Bonn
• (wann): 2008

Weitere Informationen

• Handle: http://hdl.handle.net/10419/27169
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ