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The logic of franchise contracts: Empirical results of Japan

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  • Maruyama, Masayoshi
  • Yamashita, Yu

Abstract

This paper examines the factors determining the choice between company-owned outlets and franchising. A number of researchers have based their studies on the data of retail contracting in the US. However, there has been little empirical analysis in the case of Japan. In this paper, we provide a comprehensive assessment of various alternative hypotheses about franchising by using Japanese data. The principal-agent model of franchising that assumes risk-sharing and moral-hazard is supported by our data.

Suggested Citation

  • Maruyama, Masayoshi & Yamashita, Yu, 2010. "The logic of franchise contracts: Empirical results of Japan," Japan and the World Economy, Elsevier, vol. 22(3), pages 183-192, August.
    • Handle: RePEc:eee:japwor:v:22:y:2010:i:3:p:183-192
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    References listed on IDEAS

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    Cited by:

    1. Vicente Safón & Alejandro Escribá-Esteve, 2011. "Antecedents and consequences of external risk perception in franchising: evidence from the hospitality industry," Service Business, Springer;Pan-Pacific Business Association, vol. 5(3), pages 237-257, September.
    2. Ackermann, Jeff, 2016. "The Effect of Franchising on Store Performance: Evidence from an Ownership Change," MPRA Paper 76185, University Library of Munich, Germany.
    3. Ackermann, Jeff, 2024. "The effects of franchising on stores, competitors, and consumers," International Journal of Industrial Organization, Elsevier, vol. 93(C).
    4. Matej Lahovnik Edith Bečić Steiner, 2019. "Organization in New Business Environment: a Franchisor’s View," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 22(SCI), pages 83-94, March.
    5. Maruyama, Masayoshi & Yamashita, Yu, 2014. "Revenue versus incentive: Theory and empirical analysis of franchise royalties," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 154-161.
    6. Axel Rodríguez & Vicente Caballer & Natividad Guadalajara, 2011. "Assessing the intangibles transferred in franchise businesses," Service Business, Springer;Pan-Pacific Business Association, vol. 5(1), pages 29-46, March.
    7. Masayoshi Maruyama & Yu Yamashita, 2012. "Franchise Fees and Royalties: Theory and Empirical Results," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(3), pages 167-189, May.
    8. Hidetoshi Shiroishi & Tomokazu Kubo, 2012. "Non-contractibility and Market Uncertainty in Franchise Systems," Keio/Kyoto Joint Global COE Discussion Paper Series 2012-023, Keio/Kyoto Joint Global COE Program.

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