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Franchising in Residential Brokerage

  • John D. Benjamin

    ()

    (Kogod School of Business, American University, 4400 Massachusetts Ave., NW, Washington, DC 20016)

  • Peter Chinloy

    ()

    (Kogod School of Business, American University, 4400 Massachusetts Ave., NW, Washington, DC 20016)

  • Donald Jud

    ()

    (Bryan School of Business and Economics, University of North Carolina at Greensboro, Greensboro, NC 27412-5001)

  • Daniel T. Winkler

    ()

    (Bryan School of Business and Economics, University of North Carolina at Greensboro, Greensboro, NC 27412-5001)

Registered author(s):

    This paper explores the profitability of real estate franchises. The database for the study consists of observations from the National Association of Realtors©' 2001 survey of real estate brokerage firms. Franchises are found to generate additional revenue for franchisees. However, net margins defined as the difference between revenues received and expenses paid (including franchise royalties) are lower for firms with franchises. The findings indicate that franchisors appear to extract the excess rents from the franchisee.

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    File URL: http://pages.jh.edu/jrer/papers/pdf/past/vol28n01/04.61_70.pdf
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    Article provided by American Real Estate Society in its journal journal of Real Estate Research.

    Volume (Year): 28 (2006)
    Issue (Month): 1 ()
    Pages: 61-70

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    Handle: RePEc:jre:issued:v:28:n:1:2006:p:61-70
    Contact details of provider: Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
    Web page: http://www.aresnet.org/
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    Order Information: Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
    Web: http://pages.jh.edu/jrer/about/get.htm Email:


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    1. Mathewson, G Frank & Winter, Ralph A, 1985. "The Economics of Franchise Contracts," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 503-26, October.
    2. Francine Lafontaine & Kathryn L. Shaw, 1999. "The Dynamics of Franchise Contracting: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 1041-1080, October.
    3. Gallini, Nancy T & Lutz, Nancy A, 1992. "Dual Distribution and Royalty Fees in Franchising," Journal of Law, Economics and Organization, Oxford University Press, vol. 8(3), pages 471-501, October.
    4. Randy I. Anderson & Robert Fok & Leonard V. Zumpano & Harold W. Elder, 1998. "Measuring the Efficiency of Residential Real Estate Brokerage Firms," Journal of Real Estate Research, American Real Estate Society, vol. 16(2), pages 139-158.
    5. Jud, G Donald & Rogers, Ronald C & Crellin, Glenn E, 1994. "Franchising and Real Estate Brokerage," The Journal of Real Estate Finance and Economics, Springer, vol. 8(1), pages 87-93, January.
    6. Danielle Lewis & Randy Anderson, 1999. "Residential Real Estate Brokerage Efficiency and the Implications of Franchising: A Bayesian Approach," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(3), pages 543-560.
    7. G Stacy Sirmans & David A. Macpherson, 2001. "Affinity Programs and the Real Estate Brokerage Industry," Journal of Real Estate Research, American Real Estate Society, vol. 22(3), pages 337-352.
    8. Leonard V. Zumpano & Harold W. Elder, 1994. "Economies of Scope and Density in the Market for Real Estate Brokerage Services," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(3), pages 497-513.
    9. Marsha L. Richins & William C. Black & C.F. Sirmans, 1987. "Strategic Orientation and Marketing Strategy: An Analysis of Residential Real Estate Brokerage Firms," Journal of Real Estate Research, American Real Estate Society, vol. 2(2), pages 41-54.
    10. James R. Frew & G. Donald Jud, 1986. "The Value of a Real Estate Franchise," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 14(2), pages 374-383.
    11. Anderson, Randy I & Lewis, Danielle & Zumpano, Leonard V, 2000. "Residential Real Estate Brokerage Efficiency from a Cost and Profit Perspective," The Journal of Real Estate Finance and Economics, Springer, vol. 20(3), pages 295-310, May.
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