Institutions and contracts: franchising

Etienne Pfister (), Bruno Deffains (), Myriam Doriat-Duban () and Stephane Saussier ()
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Etienne Pfister: CREDES - Centre de Recherches et de Documentations Economiques - Université Nancy 2, BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique
Bruno Deffains: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique, CREDES - Centre de Recherches et de Documentations Economiques - Université Nancy 2
Myriam Doriat-Duban: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique, CREDES - Centre de Recherches et de Documentations Economiques - Université Nancy 2
Stephane Saussier: ADIS - Analyse des Dynamiques Industrielles et Sociales - UP11 - Université Paris-Sud - Paris 11 - Département d'Economie, ATOM - Analyse Théorique des Organisations et des Marchés - UP1 - Université Paris 1 Panthéon-Sorbonne

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Abstract: This paper investigates a new dataset of franchise networks in nine countries in order to assess whether and to what extent do institutions influence the practice of franchising. Our regressions relate the structure of franchise networks (the rate of franchised units as opposed to corporate units) to individual parameters supposed to reflect the extent of moral hazards on the franchisor's and franchisee's sides and, more specifically, to various institutional parameters of the franchisor's country, namely, the legal tradition, the level of procedural formalism, the constraints imposed by labour regulation and the effectiveness of trademark protection. While agency theory parameters seem to perform rather badly in this international setting, institutions such as trademark protection and labour regulation have more explanatory power: greater trademark protection encourages franchising and the impact of labour regulation is mostly positive, depending on the type of labour regulation that is being considered. The effect of legal tradition and formalism seems negligible once these parameters are taken in.

Keywords: Franchising; Institutions; Contracts; Legal systems (search for similar items in EconPapers)
Date: 2006-01
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Published in European Journal of Law and Economics, 2006, 21, pp.53-78. ⟨10.1007/s10657-006-5671-4⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00279183

DOI: 10.1007/s10657-006-5671-4

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