Who should own it? An agency-based explanation for multi-outlet ownership and co-location in plural form franchising
Article first published online: 6 DEC 2011
Copyright © 2011 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 33, Issue 4, pages 368–386, April 2012
How to Cite
Perryman, A. A. and Combs, J. G. (2012), Who should own it? An agency-based explanation for multi-outlet ownership and co-location in plural form franchising. Strat. Mgmt. J., 33: 368–386. doi: 10.1002/smj.1947
- Issue published online: 3 FEB 2012
- Article first published online: 6 DEC 2011
- Accepted manuscript online: 23 NOV 2011 10:09AM EST
- Manuscript Revised: 18 NOV 2011
- Manuscript Received: 9 MAR 2010
- agency theory;
- plural form;
- multi-outlet ownership;
Plural forms exist when managers use two owners to perform one activity. Franchising is a plural form explained by agency theory, however, the theory is unable to explain two franchisor actions: 1) allowing franchisees to own multiple outlets and 2) co-locating company-owned and franchised outlets. We use research that describes a symbiosis between company-owned and franchised outlets to extend agency theory and explain these actions. Our investigation of ownership patterns among 4,339 outlets of 16 plural form franchisors is consistent with our theory that multi-outlet franchising is cost efficient and that co-location occurs when franchisors fill market gaps left by franchisees. Copyright © 2011 John Wiley & Sons, Ltd.