The Economics of Franchising
Cambridge University Press, 4/11/2005
EAN 9780521772525, ISBN10: 0521772524
Hardcover, 350 pages, 22.9 x 15.2 x 2.1 cm
Language: English
This 2005 book describes in much detail both how and why franchising works. It also analyses the economic tensions that contribute to conflict in the franchisor-franchisee relationship. The treatment includes a great deal of empirical evidence on franchising, its importance in various segments of the economy, the terms of franchise contracts and what we know about how all these have evolved over time, especially in the US market. A good many myths are dispelled in the process. The economic analysis of the franchisor-franchisee relationship begins with the observation that for franchisors, franchising is a contractual alternative to vertical integration. Subsequently, the tensions that arise between a franchisor and its franchisees, who in fact are owners of independent businesses, are examined in turn. In particular the authors discuss issues related to product quality control, tying arrangements, pricing, location and territories, advertising, and termination and renewals.
Preface
1. Introduction
2. Four popular misconceptions about franchising
3. Franchise contracts
4. Franchising, vertical integration, and vertical restraints
5. Quality control
6. Franchise tying contracts
7. Vertical price controls in franchising
8. Encroachment
9. Advertising and promotion
10. Termination and non-renewal
11. Concluding remarks.
'This superb book will become the standard reference for understanding the economics of franchising. Extending their previous research, these outstanding scholars assemble new data sets to establish basic facts and explode several pervasive myths about franchising. How fast is the already significant amount of franchising growing? Are franchisees more likely to succeed than independent businesses? What are the typical terms of a franchisee's contract and why? The authors answer these and other fascinating questions with a keen economic intuition and with precision. The book is a must reading for students of industrial organization and contracting.' Dennis W. Carlton, University of Chicago