Franchising, local market characteristics and alcohol sales to minors

This study examines how organizational form (corporate or franchised store) and local market characteristics (competition, size and risk of sanctions) influence retail stores' likelihood of selling alcohol to minors. Drawing on agency theory, we hypothesize that franchised stores are more likely than corporate stores to sell alcohol to minors. We also examine whether local market competition, risk of sanctions, and market size influence the relationship between franchising and alcohol sales to minors. We test the hypotheses with data collected by minors attempting to purchase alcohol in retail stores. The results offer partial support to the theoretical predictions and have implications for retail chains and regulators.