Dept. of Management and Organization
Bridge Hall 307H, Marshall School
University of Southern California
Los Angeles, CA 90089
NBER Working Papers and Publications
|December 1996||The Characteristics of Multi-Unit Ownership in Franchising: Evidence from Fast-Food Restaurants in Texas|
with Francine Lafontaine: w5859
One empirical phenomenon that has received little attention in the franchising literature is the tendency for individual franchisees to own not just one but several units of a given franchised chain. Most current theories of franchising, based on incentives, information asymmetries, and strategic arguments, have little capacity to explain this phenomenon. In fact, several of them imply that all units should be independently owned and operated. However, given the existence of multi-unit owners, most of the theories have implications for the extent to which units owned by a single owner should be 1) geographically near each other, 2) located in areas where populations display similar demographic characteristics, and 3) contiguous to each other, that is, should share a market boundary. Th...