Economics at your fingertips  

Protecting franchise chains against weather risk: A design science approach

Jean-Louis Bertrand, Xavier Brusset () and Miia Chabot

Journal of Business Research, 2021, vol. 125, issue C, 187-200

Abstract: Franchisees are often small business owners whose sales, profitability, and financial equilibrium in the first years of operation are increasingly being impacted by weather variability. The literature has analysed the effectiveness of various guarantees offered by franchisors in franchise agreements, but the case of hedging the local weather risk to which each franchisee is exposed has never been addressed. Using Design Science, we show that franchisors operating in one of the activities which are among the 70% of activity sectors exposed to weather risks, can support the setup of franchises, measure their weather risk and incorporate financial protections against the consequences of adverse weather in the franchise agreement. By doing this they can reduce the risk of financial distress, provide an innovative service, and reinforce the quality of the relationship with their franchisees.

Keywords: Risk management; Weather risk; Franchise; Design Science Research (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.jbusres.2020.12.020

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2022-08-17
Handle: RePEc:eee:jbrese:v:125:y:2021:i:c:p:187-200