Optimal Monetary Provisions in Plural Form Franchise Systems; A Theoretical Model of Incentives with Two Risk-Averse Agents

Cintya Lanchimba

No 1321, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: Empirical studies show that most franchise chains use dual distribution - or a plural form franchise system - characterized by the coexistence of franchised units and company-owned retail units in the same distribution network. Therefore, this paper focuses on dual distribution and considers the different contractual arrangements in this type of franchise system. The paper contributes to the theoretical efforts at developing a model to study the optimal determination of the share parameters (commission and royalty rates) in a mixed system.

Keywords: Dual distribution; royalty rate; commission rate; risk aversion; moral hazard (search for similar items in EconPapers)
JEL-codes: D82 L14 (search for similar items in EconPapers)
Date: 2013
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ftp://ftp.gate.cnrs.fr/RePEc/2013/1321.pdf (application/pdf)

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Working Paper: Optimal Monetary Provisions in Plural Form Franchise Systems; A Theoretical Model of Incentives with Two Risk-Averse Agents (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:1321

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