Franchising: Firms, Markets, and Intangible Assets
Abstract
percent of all retail sales in the United States and originate 12 percent of the gross national product, yet the franchise relationship has largely escaped economic analysis. This paper employs recent developments in the modeling of firms and market structures to explain the occurrence of franchising and its distribution among sectors of the economy and to analyze the contractual consequences of profit maximization by the franchisor. The first section characterizes the economic relation involved in franchising and explains why it occurs in certain sectors of the economy. The second analyzes franchisors' use of their market power as an exercise in constrained maximization. The third section considers the franchisor's choice between owned and franchised outlets.
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Researchers classify businesses into repeat versus nonrepeat industries.
“Researchers classify businesses into repeat versus nonrepeat industries (Brickley and Dark 1987;Caves and Murphy 1976).”
From Control techniques and upward flow of information in franchising in distant markets: conceptualization and preliminary evidence (1998) · cites this paper as Caves and Murphy 1976
Firms operating in the Middle East and Africa face a different classification than the one believed to hold in domestic franchising contexts.
“Firms op-erating in the Middle East and Africa clearly face a different classification than the one believed to hold in domestic franchising contexts (Brickley and Dark 1987;Caves and Murphy 1976;Manolis et al. 1995).”
From Control techniques and upward flow of information in franchising in distant markets: conceptualization and preliminary evidence (1998) · cites this paper as Caves and Murphy 1976
Cites
Coase, R. H. (1937) · Economica · doi:10.1111/j.1468-0335.1937.tb00002.x · Cited by 23,972 · see citing works
Free competition and the optimal amount of fraud
Darby, M. R., & Karni, E. (1973) · The Journal of Law and Economics · doi:10.1086/466756 · Cited by 3,947 · cited 1× · see citing works
“On this general effect of impacted information see Darby and Karni [8].”
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International franchising: A literature review and research agenda
Rosado-Serrano, A., Paul, J., & Dikova, D. (2018) · Journal of Business Research · doi:10.1016/j.jbusres.2017.12.049 · Cited by 401 · see citing works
Dant, R. P., & Nasr, N. I. (1998) · Journal of Business Venturing · doi:10.1016/s0883-9026(97)00040-2 · Cited by 168 · see citing works
International franchising: Capabilities and development
Fladmoe-Lindquist, K. (1996) · Journal of Business Venturing · doi:10.1016/0883-9026(96)00056-0 · Cited by 138 · see citing works
Nonprofit organizations and their local affiliates: A study in organizational forms
Oster, S. M. (1996) · Journal of Economic Behavior & Organization · doi:10.1016/s0167-2681(96)00843-8 · Cited by 76 · see citing works
Dunning, J. H., Pak, Y. S., & Beldona, S. (2007) · International Business Review · doi:10.1016/j.ibusrev.2007.01.005 · Cited by 68 · see citing works
- Authors
- Caves, R. E., & II, W. F. M.
- Venue
- Southern Economic Journal
- Publisher
- JSTOR
- Published
- 1976-04
- Volume
- 42
- Issue
- 4
- Pages
- 572
- ISSN
- 0038-4038 (ISSN-L)
- OpenAlex
- W2035647360
- Cited by
- 694
- References
- 2
- Citations by year
- 2026: 3 · 2025: 10 · 2024: 6 · 2023: 10 · 2022: 11 · 2021: 11 · 2020: 13 · 2019: 15 · 2018: 17 · 2017: 31 · 2016: 24 · 2015: 16 · 2014: 33 · 2013: 34 · 2012: 30
- FWCI
- 34.47
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Southern Economic Journal (publishedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Franchising Strategies and Performance
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Law, Economics, and Judicial Systems
- Keywords
- franchising, franchise relationships, franchisors, franchise, market power, constrained maximization, profit maximization, corporate structure, market structure, intangible assets, retail sales
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