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This paper aims to grasp the complexity of how and why franchise partners as strategic alliance partners interact with each other given March's exploration/ exploitation trade-off (March 1991). A research model is presented that distinguishes five types of responses that partners may adopt in their relationships. The empirical part consists of a case study which focuses on two ‘strategic change Trajectories' (SCTs) in a franchise system in the Dutch drugstore industry. During these SCTs the franchisor tried to implement strategic changes in the franchise system. This paper discusses what responses franchisees adopted in a reaction to the introduction of these SCTs by the franchisor, what responses the franchisor adopted toward these franchisees in turn, and why both partners adopted these responses. The paper concludes with adding a new response type to the current response typology, with providing insight in why franchise partners adopt certain responses, and with discussing the implications of this study. [ABSTRACT FROM AUTHOR]

The concept of performance has been little explored in the franchising literature. In this paper, we explore the franchising network performance, and more specifically the franchising network efficiency, from the franchisor point of view and through a DEA approach (Data Envelopment Analysis) Two main indicators of the franchisor revenues are used: the on-going franchising royalties and the franchising fee. The purpose of this paper is built into an efficiency perspective. Data concern the first 150 franchising networks of the Entrepreneur's 25 Annual Franchise 500® ranking (2004). The findings indicate that most of the networks are under-efficient and one of the main reasons for this stems from scale efficiency. A particular network is also studied in depth. Moreover, four hypotheses are empirically tested. Implications of the study are finally discussed. [ABSTRACT FROM AUTHOR]

The literature on franchising relies largely on the analysis of the transaction between franchisor and franchisees, sometimes also including company-owned outlets in the same investigation. This paper argues that the appropriate design of franchise contracts depends not only on the features of the transaction between franchisor and franchisees, but also on other transactions undertaken by the franchisor, particularly in upstream contracts, a hypothesis known as ‘governance inseparability'. Moreover, certain institutional environment features that affect the choice of governance mechanisms in the supply chain may indirectly influence the design of franchise contracts. In order to examine this hypothesis, this paper presents a discrete structural analysis of 21 case-studies of food franchises in France and Brazil. The cases compare franchise chains in each country that share similar business features — e.g. McDonalds' operations in France and Brazil — in an attempt to control variables related to product and franchisors' strategies. The main findings are that: a) firms choose a portfolio of governance mechanisms to govern their set of transactions; b) upstream and downstream governance mechanisms are complementary; and c) quality regulation and competition policy restrain upstream governance mechanisms, having an indirect effect on the design of the franchise contracts. [ABSTRACT FROM AUTHOR]

This paper explores a model of inter-firm network in the case of the winter sports industry. It discusses the problem of skiing resort frontiers and the nature of the inter-firms arrangements to produce the final product i.e. spending holidays in a mountain resort. Two network archetypes are defined. They ensue from two approaches in economics: the Transaction Cost Economics and the French Theory of Conventions. In conclusion, we show that these two networks are complementary. Thus, skiing resorts can no longer be seen as autonomous organizations with spatial boundaries. Their frontiers are extended to the contractual or conventional arrangements which characterize the new winter sports industrial organization. [ABSTRACT FROM AUTHOR]

The past three decades have witnessed a growing theoretical and managerial interest in international joint ventures (IJVs). Of growing interest has especially been the analysis of IJV performance. The previous studies have indicated very varying results about IJV performance and determinants of IJV performance. Fourteen hypotheses of the impact of foreign parent, target country, and investment strategy specific variables on performance were developed and tested. In a central role in the study was also the question do the results depend on the measure of performance? As the measures of performance were selected: longevity, survival, and stability. The empirical part of the paper is based on over 720 IJVs made by Finnish firms. The most significant variables were the international experience and the degree of diversification of the Finnish firms, unit unrelatedness, and the individualism dimension of culture. The results indicated relatively much differences depending on measure of performance. [ABSTRACT FROM AUTHOR]

The plural form has been the subject of a considerable body of research since Bradach developed his model (1998). Most of this work was done in North American, Australian, or European countries. The purpose was mainly to assess the degree of plural form within franchised networks using economic, environmental, organizational, or marketing variables. In the present paper, the focus is not on plural form in only one particular market but instead on a comparison of the extent of the plural form within US and French networks. The main finding is that the rate of company-owned units is significantly higher in France (36.09%) than in the United States (9.45%). This can be explained through the differences in the territory area, and also managerial and strategic differences in the way retail and service networks are run in the two countries. Differences in the extent of plural form are also explored according to the retailing or services orientation of the networks. Finally, some determinants of the extent of plural form are highlighted. [ABSTRACT FROM AUTHOR]

This paper analyses governance structures used to organize partnerships in R&D networks emphasizing the degree of administrative and social factors they embody. Data was obtained from European R&D networks created through Framework Programmes, which include a great number of universities, non-profit institutions and firms. We argue that governance structures are related to the applicability of the technology developed in the network. Findings show that two kinds of networks exist in which administrative structures as well as the openness and cohesion of the R&D network have different relevance in governance structures. This study not only provides a theoretical model to analyse governance structures of these networks, but is also useful both for improving the management of networks and for fostering collaboration at an international level. [ABSTRACT FROM AUTHOR]

Typical contracts assign both coercive and non-coercive means of power to the principal's side, providing the agent with a comparably small range of countervailing anti-power. Initially agents are therefore vulnerable to opportunistic principal behavior and will rationally anticipate this threat upon signing a contract. In this paper we analyze various forms of power and explain their asymmetrical allocation in the franchising industry. We demonstrate how franchisors restore those shifts in power that seem to disorder the desired balance by performing contractual, financial and organizational adjustments. The nature of these measures suggests that franchisors should cooperate with agents despite their freedom to behave opportunistically. According to empirical data, the better a franchisor is able to credibly alleviate a franchisee's fear of being exploited by principal opportunism, the stronger the growth generated in the entire franchise system that embraces both the company-owned and the franchise arms. [ABSTRACT FROM AUTHOR]

Previous studies in franchising research do not explain the governance structure of franchising firms as an institutional entity that consists of two interrelated parts: Allocation of residual decision rights and transfer of ownership rights. This paper fills this gap in the literature. According to the property rights view, decision rights have to be allocated according to the distribution of intangible knowledge assets between the franchisor and franchisee and ownership rights have to be assigned according to the residual decision rights. Since ownership rights are diluted in franchising networks, the dilution of residual income rights of franchised outlets is compensated for by setting up company-owned outlets. According to the property rights view, an efficient governance structure of the franchising firm implies allocation of residual decision rights according to the distribution of intangible assets between the franchisor and the franchisee and transfer of ownership rights according to the distribution of residual decision rights. We empirically investigate the influence of intangible knowledge assets on residual decision rights by using a logistic and ordinal regression model and the relationship between residual decision and ownership rights by using a simultaneous equation model on a sample of 83 firms from the Austrian franchise sector. Three hypotheses were derived from the property rights approach and tested. The empirical results are generally supportive of the hypotheses. [ABSTRACT FROM AUTHOR]

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 such plural arrangements are supposed to provide franchisors with lower costs, higher growth, greater total-quality, and reduced business risk. Empirical results of this study indicate the superiority of company-owned businesses over franchised units in generating franchisor profits. Moreover plurally organized systems compensate for losses from franchising with profits from company units and outperform purely franchised competitors in overall profitability. Despite a clear financial inferiority of franchise outlets, franchisors of our sample do not convert plural structures into wholly-owned chains. Much more when organizing the chain, franchisors face an (skewed) inverse u-shaped profitablity curve with both pure franchising and pure company-ownership lying at the (undesirable) extremes and with a performance peak somewhere in between. [ABSTRACT FROM AUTHOR]