Determinants of Multi-unit Franchising: An Organizational Economics Framework
Version of Record online: 21 DEC 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Managerial and Decision Economics
Special Issue: Governance of Franchising Networks, Cooperatives and Alliances
Volume 34, Issue 3-5, pages 161–169, April-July 2013
How to Cite
Hussain, D., Perrigot, R., Mignonac, K., Akremi, A. E. and Herrbach, O. (2013), Determinants of Multi-unit Franchising: An Organizational Economics Framework. Manage. Decis. Econ., 34: 161–169. doi: 10.1002/mde.2580
- Issue online: 8 APR 2013
- Version of Record online: 21 DEC 2012
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.