Multi-unit Ownership in Franchising: Evidence from the Fast-Food Industry in Texas

Arturs Kalnins () and Francine Lafontaine ()
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Arturs Kalnins: University of Southern California

RAND Journal of Economics, 2004, vol. 35, issue 4, 747-761

Abstract: Using data on all restaurants opened in Texas between 1980 and 1995 by seven large U.S. fast-food chains, we examine the extent of multi-unit ownership among franchisees and analyze how franchisors allocate the ownership of new units. We show that franchisees with nearby units are much more likely to be assigned ownership of a new unit. Further, controlling for distance, franchisees are more likely to obtain a new unit whose market is contiguous and demographically similar to those surrounding their existing units. Finally, franchisors use these same criteria to select those units to retain as company owned.

Keywords: Transactional Relationships; Contracts and Reputation; Networks Sports; Gambling; Recreation; Tourism Franchising; Restaurants (search for similar items in EconPapers)
JEL-codes: L14 L83 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (53)

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Persistent link: https://EconPapers.repec.org/RePEc:rje:randje:v:35:y:2004:4:p:747-761

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