Dual distribution in franchising is addressed from an incomplete contracting perspective. We explicitly model cooperative (dual distribution) franchising as an organizational form, next to wholly-owned, wholly-franchised, and dual distribution franchise systems. Key conclusions of the model are: (1) dual distribution as an efficient governance mechanism does not depend on heterogeneous downstream outlets, and (2) whether dual distribution or some other organizational form is efficient depends on the size of the benefits to dual distribution relative to the parties' costs of investing.

Cooperative franchising, Dual distribution, Franchising, Incomplete contracting
Retail and Wholesale Trade; Warehousing; e-Commerce (jel L81), Business Administration and Business Economics; Marketing; Accounting (jel M), New Firms; Startups (jel M13), Management of Technological Innovation and R&D (jel O32)
dx.doi.org/10.1016/j.jretai.2011.01.003, hdl.handle.net/1765/32154
ERIM Top-Core Articles
Journal of Retailing
Erasmus Research Institute of Management

Hendrikse, G.W.J, & Jiang, T. (2011). An Incomplete Contracting Model of Dual Distribution in Franchising. Journal of Retailing, 87(3), 332–344. doi:10.1016/j.jretai.2011.01.003