The DOI matches its Crossref record.
The Dynamics of Franchise Contracting: Evidence from Panel Data
Abstract
This paper provides the first systematic evidence on how franchi‐sors adjust their royalty rates and franchise fees as they gain fran‐chising experience. This evidence comes from a unique panel data set that we assembled on these monetary contract terms for about 1,000 franchisors each year for the 1980–92 period. We find that there is much persistence, over time, in franchise contract terms within firms. We find this despite sizable across‐firm differences in royalty rates and franchise fees. In addition, franchisors do not systematically increase or decrease their royalty rates or franchise fees as they become better established, contrary to predictions from some specific theoretical models. We conclude that variation in contract terms is mostly determined by differences across firms, not by within‐firm changes over time. Finally, we find no negative relationship, within firms, between up‐front franchise fees and royalty rates.
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Cited by
Franchising: A Review and Avenues to Greater Theoretical Diversity
Combs, J. G., Michael, S. C., & Castrogiovanni, G. J. (2004) · Journal of Management · doi:10.1016/j.jm.2004.06.006 · Cited by 450
Blair, R. D., & Lafontaine, F. (2005) · doi:10.1017/cbo9780511753879 · Cited by 364
Self-citationHandley, S. M., & Angst, C. M. (2015) · Strategic Management Journal · doi:10.1002/smj.2300 · Cited by 213
How Do Franchise Contracts Evolve? A Study of Three German SMEs*
Cochet, O., & Garg, V. K. (2008) · Journal of Small Business Management · doi:10.1111/j.1540-627x.2007.00236.x · Cited by 72
International Franchising Practices in Mexico: Do Franchisors Customize Their Contracts?
Lafontaine, F., & Oxley, J. E. (2004) · Journal of Economics & Management Strategy · doi:10.1111/j.1430-9134.2004.00005.x · Cited by 69
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Metadata
- Authors
- Lafontaine, F., & Shaw, K. L.
- Venue
- Journal of Political Economy
- Publisher
- University of Chicago Press
- Published
- 1999-10
- Volume
- 107
- Issue
- 5
- Pages
- 1041-1080
- ISSN
- 0022-3808 (ISSN-L)
- 1537-534X
- OpenAlex
- W2026999211
- Cited by
- 259
- References
- 0
- FWCI
- 20.73
- Type
- journal article
- Language
- en
- Open access
- closed
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