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Franchisee Associations as Sources of Bargaining Power? Some Evidence

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  • Nicholas Argyres
  • Janet Bercovitz

Abstract

The empirical literature in economics and strategy on contract structure, including on franchise contract structure, has been largely based on agency and transaction cost theories. The effects of bargaining power have been much less studied. This paper considers the role of independent franchisee associations in franchising relationships as a means to test for the presence of bargaining power effects. We find that the presence or absence of a franchisee association is significantly related to each of three key contractual and relationship characteristics: contract duration, noncompete stringency, and terminations/nonrenewals. This suggests that bargaining power should be accounted for in studies of contract structure and relationship outcomes.

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  • Nicholas Argyres & Janet Bercovitz, 2015. "Franchisee Associations as Sources of Bargaining Power? Some Evidence," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(4), pages 811-832, October.
    • Handle: RePEc:bla:jemstr:v:24:y:2015:i:4:p:811-832
    DOI: 10.1111/jems.12111
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    3. Perrigot, Rozenn & López-Fernández, Begoña & Basset, Guy, 2021. "Conflict management capabilities in franchising," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    4. Kate Odziemkowska & Sinziana Dorobantu, 2021. "Contracting Beyond the Market," Organization Science, INFORMS, vol. 32(3), pages 776-803, May.
    5. Thierry Pénard & Rozenn Perrigot, 2015. "Search Online – Purchase Online in Franchising: An Empirical Analysis of Franchisor Website Functionality," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201517, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    6. Fu-Sheng Tsai & Chin-Chiung Kuo & Julia L. Lin, 2020. "Knowledge Heterogenization of the Franchising Literature Applying Transaction Cost Economics," Economies, MDPI, vol. 8(4), pages 1-27, November.
    7. Perrigot, Rozenn & López-Fernández, Begoña & Basset, Guy, 2020. "“Conflict-performance assumption†or “performance-conflict assumption†: Insights from franchising," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    8. Begoña López-Fernández & Susana López-Bayón, 2018. "Antecedents of early terminations in franchising: franchisor versus franchisee cancelations," Small Business Economics, Springer, vol. 50(4), pages 677-695, April.
    9. Pénard, Thierry & Perrigot, Rozenn, 2017. "Online search – Online purchase in franchising: An empirical analysis of franchisor website functionality," Journal of Retailing and Consumer Services, Elsevier, vol. 39(C), pages 164-172.
    10. Eunkyung Lee & Ji-Hern Kim & Chang Seop Rhee, 2021. "Effects of Marketing Decisions on Brand Equity and Franchise Performance," Sustainability, MDPI, vol. 13(6), pages 1-15, March.

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