Non-contractibility and Market Uncertainty in Franchise Systems
Franchisors face a tradeoff between centralization of decision rights and decentralization of decision rights. Regarding the problem, we developed a causal model considering that the relationship between non-contractibility of assets and the allocation of decision rights is not constant, but is contingent on market uncertainty. The results of the analysis showed that a franchise system would be centralized when (1) the franchisor's assets are intangible and are impossible to be transferred by contract, (2) the franchisees' assets are less intangible and are possible to be transferred by contract, and/or (3) the market is uncertain.
|Date of creation:||Dec 2012|
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- Windsperger, Josef, 2004. "Centralization of franchising networks: evidence from the Austrian franchise sector," Journal of Business Research, Elsevier, vol. 57(12), pages 1361-1369, December.
- Luis Vázquez, 2005. "Up-front Franchise Fees and Ongoing Variable Payments as Substitutes: An Agency Perspective," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(4), pages 445-460, 06. Full references (including those not matched with items on IDEAS)
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