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An Empirical Look at Franchising as an Organizational Form

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Author Info
Norton, Seth W

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Abstract

Franchise contracts are identified as a hybrid form of economic organization. Motives for the dominance of franchise arrangements are identified by examining the theoretical literature on franchising and related literatures on the theory of the firm, firm growth, managerial and employee selection, a nd brand-name capital. Empirical tests are performed on the incidence of franchise contracts across states for three industries in which f ranchising is prominent and data are readily available. The results s uggest that both principal-agent incentives and informational incenti ves favor the use of franchise arrangements. Copyright 1988 by the University of Chicago.

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File URL: http://www.jstor.org/fcgi-bin/jstor/listjournal.fcg/00219398/.61-.67
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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Business.

Volume (Year): 61 (1988)
Issue (Month): 2 (April)
Pages: 197-218
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Handle: RePEc:ucp:jnlbus:v:61:y:1988:i:2:p:197-218

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  1. Timothy Bates, 1994. "Firms Started As Franchises Have Lower Survival Rates Than Independent Small Business Startups," Working Papers 94-3, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  2. Monika Hamori, 2006. "Are franchises bad employers?," Working Papers Economia wp06-11, Instituto de Empresa, Area of Economic Environment. [Downloadable!]
  3. Sebastian Kranz & Shira B. Lewin-Solomons, . "Decision Structures in Franchise Systems of the Plural Form," Bonn Econ Discussion Papers bgse8_2008, University of Bonn, Germany. [Downloadable!]
  4. Affuso, L., 2000. "Intra-Firm Retail Contracting: Survey Evidence from the UK'," Cambridge Working Papers in Economics 0022, Faculty of Economics, University of Cambridge. [Downloadable!]
  5. Canice Prendergast, 2000. "The Tenuous Tradeoff Between Risk and Incentives," NBER Working Papers 7815, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Lewin-Solomons, S., 2000. "Innovation and Authority in Franchise Systems: An Empirical Exploration of the Plural Form," Cambridge Working Papers in Economics 0015, Faculty of Economics, University of Cambridge. [Downloadable!]
  7. Alan B. Krueger, 1990. "Ownership, Agency and Wages: An Examination in the Fast Food Industry," NBER Working Papers 3334, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Joao Carlos Correia Leitao, 2004. "Optimal Divisionalization for Selling Networks of Cable Television Services," Industrial Organization 0403004, EconWPA. [Downloadable!]
  9. Arturs Kalnins & Francine Lafontaine, 1996. "The Characteristics of Multi-Unit Ownership in Franchising: Evidence from Fast-Food Restaurants in Texas," NBER Working Papers 5859, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Francine Lafontaine & Kathryn L. Shaw, 2001. "Targeting Managerial Control: Evidence from Franchising," NBER Working Papers 8416, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Francine Lafontaine & Kathryn L. Shaw, 1996. "The Dynamics of Franchise Contracting: Evidence from Panel Data," NBER Working Papers 5585, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  12. Benito Arruñada & Luis Garicano & Luis Vázquez, 1998. "Completing Contracts Ex Post: How Car Manufacturers Manage Car Dealers," Economics Working Papers 267, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2004. [Downloadable!]
    Other versions:
  13. Clarissa Yeap, 2006. "Residual Claims and Incentives in Restaurant Chains," Working Papers 06-18, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  14. Nancy T. Gallini & Nancy A. Lutz, 1991. "Dual Distribution in Franchising," Cowles Foundation Discussion Papers 973, Cowles Foundation, Yale University. [Downloadable!]
  15. S.O. Monye, 1997. "Transaction Costs and the Internationalisation of Business Franchising," CIBS Research Papers in International Business 1-97, London South Bank University CIBS. [Downloadable!]
  16. Lewin-Solomons, S., 2000. "Autonomy, Contractibility and the Franchise Relationship," Cambridge Working Papers in Economics 0016, Faculty of Economics, University of Cambridge. [Downloadable!]
  17. Hendrikse, G.W.J. & Jiang, T., 2005. "Plural Form in Franchising: An Incomplete Contracting Approach," Research Paper ERS-2005-090-ORG Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  18. Francine Lafontaine & Joanne Oxley, 2001. "International Franchising: Evidence from US and Canadian Franchisors in Mexico," NBER Working Papers 8179, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  19. Manuel González & Benito Arruñada & Alberto Fernández, 1997. "La decisión de subcontratar: el caso de las empresas constructoras," Investigaciones Economicas, Fundación SEPI, vol. 21(3), pages 501-521, September. [Downloadable!]
  20. Peter Cappelli & Monika Hamori, 2007. "Are Franchises Bad Employers?," NBER Working Papers 13327, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  21. Hendrikse, G.W.J. & Jiang, T., 2007. "An Incomplete Contracting Model of Governance Structure Variety in Franchising," Research Paper ERS-2007-049-ORG Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  22. Nicolai J. Foss & Keld Laursen, 2002. "Performance Pay, Delegation, and Multitasking under Uncertainty and Innovativeness: An Empirical Investigation," DRUID Working Papers 02-14, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
    Other versions:
  23. Benito Arruñada & Luis Garicano & Luis Vázquez, 1999. "Contractual Allocation of Decision Rights and Incentives: The Case of Automobile Distribution," Economics Working Papers 424, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
  24. Lewin-Solomons, S.B., 2000. "The Plural Form in Franchising: A Synergism of Market and Hierarchy," Cambridge Working Papers in Economics 0027, Faculty of Economics, University of Cambridge. [Downloadable!]
  25. Brian Wu & Anne Marie Knott, 2005. "Entrepreneurial Risk and Market Entry," The Office of Advocacy Small Business Working Papers 05bwmk, U.S. Small Business Administration, Office of Advocacy. [Downloadable!]
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