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Franchisee Associations as Sources of Bargaining Power? Some Evidence
Author(s) -
Argyres Nicholas,
Bercovitz Janet
Publication year - 2015
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/jems.12111
Subject(s) - bargaining power , franchise , agency (philosophy) , transaction cost , power (physics) , economics , microeconomics , database transaction , test (biology) , duration (music) , business , marketing , sociology , social science , art , paleontology , literature , computer science , programming language , biology , physics , quantum mechanics
The empirical literature in economics and strategy on contract structure, including on franchise contract structure, has been largely based on agency and transaction cost theories. The effects of bargaining power have been much less studied. This paper considers the role of independent franchisee associations in franchising relationships as a means to test for the presence of bargaining power effects. We find that the presence or absence of a franchisee association is significantly related to each of three key contractual and relationship characteristics: contract duration, noncompete stringency, and terminations/nonrenewals. This suggests that bargaining power should be accounted for in studies of contract structure and relationship outcomes.