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Franchise failure: a reassessment of the Bates (1995) results

  • Gary Castrogiovanni

    ()

  • Robert Justis

    ()

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    Franchising is often touted as a safe route to business ownership in the service arena. Yet findings by Bates (J Small Bus Manage 33(2):26–36, 1995 ) suggest that franchising may be a riskier alternative for prospective business owners than starting a non-franchised business. We contend that this conclusion is inappropriate because flaws in Bates’ study lend themselves to alternative interpretations of his results. The most critical flaws and plausible alternative interpretations are explained, and implications for prospective business owners are discussed. Copyright Springer-Verlag 2007

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    File URL: http://hdl.handle.net/10.1007/s11628-007-0023-1
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    Article provided by Springer in its journal Service Business.

    Volume (Year): 1 (2007)
    Issue (Month): 3 (September)
    Pages: 247-256

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    Handle: RePEc:spr:svcbiz:v:1:y:2007:i:3:p:247-256
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    1. Holmberg, Stevan R. & Morgan, Kathryn Boe, 2003. "Franchise turnover and failure: New research and perspectives," Journal of Business Venturing, Elsevier, vol. 18(3), pages 403-418, May.
    2. Timothy Bates, 1997. "Survival Patterns Among Newcomers to Franchising," Working Papers 97-1, Center for Economic Studies, U.S. Census Bureau.
    3. Alfred R Nucci & Timothy Bates, 1990. "An Analysis of Small Business Size and Rate of Discontinuance," Working Papers 90-2, Center for Economic Studies, U.S. Census Bureau.
    4. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
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