Plural Form in Franchising: An Incomplete Contracting Approach
2005-12-21
Research Paper
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Plural form franchising is modeled from an incomplete contracting perspective. Complete franchising is the unique, efficient governance structure only when the plural form externality is limited and the costs of investment are low for both franchisees. Governance structure choice is irrelevant when the costs of investment are high for all franchisees, because no franchisee will invest. Finally, a plural form governance structure is the unique, efficient equilibrium in all other cases because the power allocated to independent franchisees makes them confident that they will be able to recoup their investments. Not locational or other differences between units are necessary for the emergence of plural form franchising, but positive externalities being specific for the plural form.
- M : Business Administration and Business Economics; Marketing; Accounting
- M12 : Personnel Management
- L2 : Firm Objectives, Organization, and Behavior
- M10 : Business Administration: General
- M55 : Labor Contracting Devices: Outsourcing; Franchising; Other
- structure
- governance
- franchisee
- governance structure
- plural
- investment
- franchising
- choice
- plural form
- governance structure iv
- franchisor
- value
- governance structure choice
- incentive
- franchise
- plural form franchising
- plural form externality
- governance structures
- payoff
- right
