How to Design Franchise Contracts: The Role of Contractual Hazards and Experience

Vanesa Solis‐rodriguez and Manuel Gonzalez‐diaz

Journal of Small Business Management, 2012, vol. 50, issue 4, 652-677

Abstract: This paper analyzes factors determining contractual completeness in franchising. We argue that completeness is affected by firms' contract design capabilities along with different contractual hazards. Our results support these hypotheses by showing that experienced franchisors draw up more complete contracts. Additionally, we observe that the effects of contractual hazards on completeness are not always positive and direct. There may be also a substitution effect between formal and relational governance mechanisms because risks of bilateral expropriations might serve as a mutual guarantee. This interaction also suggests that contract analysis must not only focus on particular clauses but also on the contract as a whole.

Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1111/j.1540-627X.2012.00370.x (text/html)
Access to full text is restricted to subscribers.

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: https://EconPapers.repec.org/RePEc:taf:ujbmxx:v:50:y:2012:i:4:p:652-677

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/ujbm20

DOI: 10.1111/j.1540-627X.2012.00370.x

Access Statistics for this article

Journal of Small Business Management is currently edited by Eric Liguori

More articles in Journal of Small Business Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().