In this paper, we examine ownership structures of franchise chains and evaluate their impact on franchisor profit. Specifically we compare pure forms of franchising with those that use both company-owned and franchised outlets within one chain - a phenomenon termed the plural form. Theoretically...

Early research work theorized franchising to exist because Hybridal Form Benefits (HFB) are achieved by the franchisor. Compared to the full hierarchy, franchising was held to reduce agency costs, to overcome resource scarcity and to enable risk sharing. Lately, the focus has shifted to an...

Traditional principal agent theory interprets franchising as a solution to the agency problems associated with incentives and observability. Franchising has been viewed as an institution that aligns the right to make decisions with the residual claims deriving from these decisions. One problem...