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Cited by 72Franchising Strategies and PerformanceEntrepreneurship Studies and InfluencesManagement and Organizational Studies

The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.

How Do Franchise Contracts Evolve? A Study of Three German SMEs*

Cochet, Oliver, Garg, Vinay Kumar·2008·Journal of Small Business Management
DOI 10.1111/j.1540-627x.2007.00236.x
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Abstract

Although contracts are crucial for franchisors in managing relationships with franchisees, franchising research has not adequately investigated whether and how franchisors learn about effective contracts. This paper explores the evolution of formal contracts used by three German chains from the restaurant, hotel, and retailing industries. We describe the nature of learning involved in designing contracts in the sampled chains, and suggest reasons why contracts change over time. Despite the fact that drafting contracts with independent entrepreneurs is one of the important tasks the franchisor is rewarded for, we found that franchisors remain boundedly rational and therefore are unable to completely anticipate undesirable franchisee behavior and to incorporate suitable safeguards. We develop propositions to suggest that: (1) learning explains contract design capability better than does foresight, (2) a new management and the pursuit of uniformity lead to contract changes, and (3) the presence of an active franchisee council promotes the efficiency of the contract change process. We offer implications of our findings for theory, practice, and research.

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Citations

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Research works printed but not linked: 39

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Metadata

Authors
Cochet, O., & Garg, V. K.
Affiliations
  • University of Münster (DE)
  • Missouri State University (US)
Corresponding author
Garg, Vinay Kumar
Venue
Journal of Small Business Management
Publisher
Informa UK Limited
Published
2008-01
Volume
46
Issue
1
Pages
134-151
ISSN
  • 0047-2778 (ISSN-L)
  • 1540-627X
DOI
10.1111/j.1540-627x.2007.00236.x
OpenAlex
W2064555608
Cited by
72
References
1
Citations by year
2026: 1 · 2025: 2 · 2023: 1 · 2022: 1 · 2021: 3 · 2020: 4 · 2019: 1 · 2018: 7 · 2017: 6 · 2016: 4 · 2015: 7 · 2014: 5 · 2013: 9 · 2012: 5
FWCI
16.23
Type
journal article
Language
en
Open access
closed
Licence
doi.wiley.com/10.1002/tdm_license_1.1 (tdm, 2800 d)
Locations
  • Journal of Small Business Management (publishedVersion)
  • BearWorks (Missouri State University) (submittedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Franchising Strategies and Performance
  • Social Sciences › Business, Management and Accounting › Management of Technology and Innovation › Entrepreneurship Studies and Influences
  • Social Sciences › Business, Management and Accounting › Organizational Behavior and Human Resource Management › Management and Organizational Studies
Keywords
franchising, franchise agreements, contract design, bounded rationality, organizational learning, franchisors, small and medium-sized enterprises, restaurant chains, hotel chains, retail chains, management change, uniformity

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