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Determinants of Multi‐unit Franchising: An Organizational Economics Framework
Author(s) -
Hussain Dildar,
Perrigot Rozenn,
Migac Karim,
Akremi Assâad El,
Herrbach Olivier
Publication year - 2012
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2580
Subject(s) - transaction cost , franchise , unit (ring theory) , context (archaeology) , principal–agent problem , organizational unit , sample (material) , microeconomics , agency (philosophy) , industrial organization , database transaction , economics , business , empirical evidence , marketing , management , sociology , computer science , social science , philosophy , chemistry , mathematics , computer security , biology , paleontology , corporate governance , epistemology , chromatography , programming language , mathematics education
In this paper, we use organizational economics theories to explain the percentage of multi‐unit franchisees within franchise chains. We use transaction cost theory, property rights view and agency theory to formulate three research hypotheses that are related to franchisees' transaction‐specific investments, intangibility of system‐specific assets and risk of franchisee free‐riding, respectively. These hypotheses are tested in the French franchising context by using a sample of 138 franchisors. The empirical results are largely supportive of the hypotheses. We extend the franchising literature by arguing that the explanation of the franchisor's use of multi‐unit franchising requires the combined application of different theoretical perspectives. Copyright © 2012 John Wiley & Sons, Ltd.