IDEAS home Printed from https://ideas.repec.org/a/eee/joreco/v43y2018icp209-217.html
   My bibliography  Save this article

Resale pricing in franchised stores: A franchisor perspective

Author

Listed:
  • Perrigot, Rozenn
  • Basset, Guy

Abstract

How resale prices in franchising are determined is of particular interest to franchisors and franchisees, as well as researchers, due to their links with customer attraction, chain uniformity, franchisor know-how, franchisee autonomy and legal dimensions. We combine legal and managerial considerations to assess the way franchisors perceive price-setting policies within their chains by looking at which specific practices are involved in franchise chains, which rules are approved by franchisors, which ones franchisors comply with or skirt, etc. This empirical study is based on an analysis of 19 semi-structured interviews with franchisors from different brands and industries running their businesses in the French market. Findings show that franchisors have different understandings of their franchisees' freedom in terms of resale pricing. Even though the ban on directly imposed resale prices on franchisees seems to be accepted in practice by interviewed franchisors, some franchisors impose prices without openly admitting to it. This paper can be considered by franchise experts, franchisors, franchisees and franchisee candidates as an overview of resale price-related legal aspects, adopted practices and potential conflicts in franchise chains. It also highlights price-related practices to be avoided in order to prevent potential conflicts in franchise chains.

Suggested Citation

  • Perrigot, Rozenn & Basset, Guy, 2018. "Resale pricing in franchised stores: A franchisor perspective," Journal of Retailing and Consumer Services, Elsevier, vol. 43(C), pages 209-217.
    • Handle: RePEc:eee:joreco:v:43:y:2018:i:c:p:209-217
    DOI: 10.1016/j.jretconser.2018.03.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969698917305520
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretconser.2018.03.008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Arturs Kalnins, 2003. "Hamburger Prices and Spatial Econometrics," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(4), pages 591-616, December.
    2. Rajiv P. Dant & Rozenn Perrigot & Gérard Cliquet, 2008. "A cross-cultural comparison of the plural forms in franchise networks : United States, France, and Brazil," Post-Print halshs-00280723, HAL.
    3. Lafontaine, Francine, 1999. "Franchising versus corporate ownership: The effect on price dispersion," Journal of Business Venturing, Elsevier, vol. 14(1), pages 17-34, January.
    4. Itai Ater & Oren Rigbi, 2015. "Price control and advertising in franchising chains," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 148-158, January.
    5. Rozenn Perrigot & Olivier Herrbach, 2012. "The plural form from the inside A study of franchisee perception of company-owned outlets within their network," Post-Print halshs-01102636, HAL.
    6. Rozenn Perrigot & Olivier Herrbach & Gérard Cliquet & Guy Basset, 2017. "Know-how transfer mechanisms in franchise networks: a study of franchisee perceptions," Post-Print halshs-01615110, HAL.
    7. Raphael Thomadsen, 2005. "The Effect of Ownership Structure on Prices in Geographically Differentiated Industries," RAND Journal of Economics, The RAND Corporation, vol. 36(4), pages 908-929, Winter.
    8. Guy Basset & Rozenn Perrigot, 2015. "Franchisees’ Resale Price Policy Facing Legal, Contractual and Professional Constraints: Insights from European and French Perspectives," Research in Law and Economics, in: Economic and Legal Issues in Competition, Intellectual Property, Bankruptcy, and the Cost of Raising Children, volume 27, pages 119-142, Emerald Group Publishing Limited.
    9. Renáta Kosová & Francine Lafontaine & Rozenn Perrigot, 2013. "Organizational Form and Performance: Evidence from the Hotel Industry," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1303-1323, October.
    10. Evelien P. M. Croonen & Maryse J. Brand & Eelko K. R. E. Huizingh, 2016. "To be entrepreneurial, or not to be entrepreneurial? Explaining differences in franchisee entrepreneurial behavior within a franchise system," International Entrepreneurship and Management Journal, Springer, vol. 12(2), pages 531-553, June.
    11. Rozenn Perrigot & Guy Basset & Brinja Meiseberg, 2016. "Resale prices in franchising: insights from franchisee perspectives," Post-Print halshs-01615113, HAL.
    12. Francine Lafontaine, 1992. "Agency Theory and Franchising: Some Empirical Results," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 263-283, Summer.
    13. Michael, Steven C., 2002. "Can a franchise chain coordinate?," Journal of Business Venturing, Elsevier, vol. 17(4), pages 325-341, July.
    14. Francine Lafontaine & Fiona Scott Morton, 2010. "Markets: State Franchise Laws, Dealer Terminations, and the Auto Crisis," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 233-250, Summer.
    15. Guy Basset & Rozenn Perrigot, 2015. "Franchisees’ Resale Price Policy Facing Legal, Contractual and Professional Constraints: Insights from European and French Perspectives," Post-Print halshs-01238501, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meiseberg, Brinja & Perrigot, Rozenn, 2020. "Pricing-based practices, conflicts and performance in franchising," European Management Journal, Elsevier, vol. 38(6), pages 939-955.
    2. Perrigot, Rozenn & López-Fernández, Begoña & Basset, Guy, 2021. "Conflict management capabilities in franchising," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    3. Rozenn Perrigot & Begoña López-Fernández & Guy Basset & Olivier Herrbach, 2020. "Resale pricing as part of franchisor know-how," Post-Print halshs-02566446, HAL.
    4. 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).
    5. 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.
    6. Miranda, Oscar Mauricio Gómez, 2022. "Conocimiento del estudiante universitario emprendedor sobre la franquicia: el caso de una institución de educación superior en Colombia," Revista Tendencias, Universidad de Narino, vol. 23(1), pages 225-251, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meiseberg, Brinja & Perrigot, Rozenn, 2020. "Pricing-based practices, conflicts and performance in franchising," European Management Journal, Elsevier, vol. 38(6), pages 939-955.
    2. Rozenn Perrigot & Begoña López-Fernández & Guy Basset & Olivier Herrbach, 2020. "Resale pricing as part of franchisor know-how," Post-Print halshs-02566446, HAL.
    3. Vázquez-Suárez, Luis & Mejía-Vásquez, Pericles Ramón & Serafim da Silva, Sheila & Sánchez-Gómez, Roberto, 2022. "Gender’s moderating role in the relationship between organisational form and performance in the Spanish supermarket industry," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    4. 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.
    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. 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.
    7. Itai Ater & Oren Rigbi, 2015. "Price control and advertising in franchising chains," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 148-158, January.
    8. 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).
    9. Guo, Shiau-Ling, 2023. "The governance implication of the geographic concentration of franchise activities for franchise relationships," Journal of Business Research, Elsevier, vol. 157(C).
    10. Muriel Fadairo & Cintya Lanchimba Lopez, 2012. "Performance in distribution systems : What is the influence of the upstream firm’s organizational choices ?," Working Papers 1224, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    11. Jeff Ackermann, 2019. "The Effect of Franchising on Store Performance: Evidence from an Ownership Change," Management Science, INFORMS, vol. 65(11), pages 5188-5196, November.
    12. Itai Ater & Oren Rigbi, 2007. "Price Control In Franchised Chains: The Case Of McDonald's Dollar Menu," Discussion Papers 06-022, Stanford Institute for Economic Policy Research.
    13. Jung Hwan Koh & Christian Rojas, 2022. "Multi‐unit ownership and market power: A study of the lodging industry in Texas," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 4087-4105, December.
    14. Muriel Fadairo & Cintya Lanchimba, 2012. "Performance in distribution systems : What is the influence of the upstream firm's organizational choices ?," Working Papers halshs-00727382, HAL.
    15. Alessandro Giudici & James G. Combs & Benedetto Lorenzo Cannatelli & Brett R. Smith, 2020. "Successful Scaling in Social Franchising: The Case of Impact Hub," Entrepreneurship Theory and Practice, , vol. 44(2), pages 288-314, March.
    16. Kacker, Manish & Perrigot, Rozenn, 2016. "Retailer use of a professional social media network: Insights from franchising," Journal of Retailing and Consumer Services, Elsevier, vol. 30(C), pages 222-233.
    17. Tongil “TI”Kim, 2021. "When Franchisee Service Affects Demand: An Application to the Car Radiator Market and Resale Price Maintenance," Marketing Science, INFORMS, vol. 40(1), pages 101-121, January.
    18. Philip G. Gayle & Zijun Luo, 2015. "Choosing between Order-of-Entry Assumptions in Empirical Entry Models: Evidence from Competition between Burger King and McDonald's Restaurant Outlets," Journal of Industrial Economics, Wiley Blackwell, vol. 63(1), pages 129-151, March.
    19. Arturs Kalnins, 2004. "An Empirical Analysis of Territorial Encroachment Within Franchised and Company-Owned Branded Chains," Marketing Science, INFORMS, vol. 23(4), pages 476-489, September.
    20. Shaoling Chen & Susheng Wang & Haisheng Yang, 2015. "Spatial Competition and Interdependence in Strategic Decisions: Empirical Evidence from Franchising," Economic Geography, Clark University, vol. 91(2), pages 165-204, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joreco:v:43:y:2018:i:c:p:209-217. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing-and-consumer-services .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.