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On the economic geography of dual distribution — The case of McDonald’s in Germany

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  • Freiwald, Nisa E.
  • Juranek, Steffen
  • Walz, Uwe

Abstract

We analyze the allocation of ownership in a franchise system by focusing on location-specific characteristics of the outlets. This study uses a comprehensive data set on McDonald’s restaurants in Germany to investigate the drivers of the decision on whether outlets are company-owned or franchised. We find strong evidence for the repeat-customer hypothesis by showing that outlets are significantly more likely to be company-owned when they are located at places with relatively few repeat customers. We observe the same for outlets that are closer to McDonald’s headquarters. Finally, we find pronounced clustering of multi-unit franchisees.

Suggested Citation

  • Freiwald, Nisa E. & Juranek, Steffen & Walz, Uwe, 2020. "On the economic geography of dual distribution — The case of McDonald’s in Germany," Economics Letters, Elsevier, vol. 191(C).
    • Handle: RePEc:eee:ecolet:v:191:y:2020:i:c:s0165176520301117
    DOI: 10.1016/j.econlet.2020.109140
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    References listed on IDEAS

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    More about this item

    Keywords

    Franchising; Dual distribution; Agency theory; Geo-locational data; Economic geography;
    All these keywords.

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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