Multi-unit Ownership in Franchising: Evidence from the Fast-Food Industry in Texas
AbstractUsing data on all restaurants opened in Texas between 1980 and 1995 by seven large U.S. fast-food chains, we examine the extent of multi-unit ownership among franchisees and analyze how franchisors allocate the ownership of new units. We show that franchisees with nearby units are much more likely to be assigned ownership of a new unit. Further, controlling for distance, franchisees are more likely to obtain a new unit whose market is contiguous and demographically similar to those surrounding their existing units. Finally, franchisors use these same criteria to select those units to retain as company owned.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 35 (2004)
Issue (Month): 4 (Winter)
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Web page: http://www.rje.org
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- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
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