Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
886680 | Journal of Retailing | 2008 | 9 Pages |
Abstract
Empirical studies show that most franchise systems consist of both franchisee-owned and franchisor-owned units. We contribute a new theory that explains why such a mixture exists, using a model that focuses on the franchisor's optimal risk allocation. The costs of risk and controlling franchised units explain the varying fraction of franchisee-owned to total selling units, and the incentive to franchise decreases with an increasing fraction of franchisee-owned to total selling units, as well as with decreasing costs of control. Our explanation for these plural systems is consistent with the ownership redirection hypothesis.
Keywords
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Marketing
Authors
Thomas Bürkle, Thorsten Posselt,