Contractual Design as a Determinant of Performance

Magali Chaudey () and Muriel Fadairo ()
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Muriel Fadairo: CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - UJM - Université Jean Monnet - Saint-Étienne

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Abstract: This empirical note deals with the contractual design of relationships between producers and retailers. It provides evidence on the links between the features of vertical contracts organizing franchising networks and the performances of these networks. An agency perspective is used to understand the structure of contracts. We focus on the relevance of vertical restraints by the upstream firm to prevent retailers from free-riding in the distribution networks. From six frequent contractual provisions we distinguish two types of contracts according to the degree of constraint imposed on the franchisees. Econometric estimations carried out on this basis offer evidence consistent with the hypothesis that within franchising systems, more constrained contracts for retailers encourage better performance at the network level.

Keywords: Vertical Restraints; Franchising Network Performance; Agency Theory (search for similar items in EconPapers)
Date: 2008-02-01
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Published in International Journal of the Economics of Business., 2008, 15 (1), pp.117-127. ⟨10.1080/13571510701830556⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:ujm-00268803

DOI: 10.1080/13571510701830556

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