Economic analysis of contractual relationships in franchising systems with case studies

Abstract

Fieldwork methods are used to analyse the nature of franchise systems in the UK. These systems are viewed in terms of their contractual relationships following theoretical approaches suggested by the economics of organisation, including agency analysis. In particular, product, brand and specialised-input franchises are identified and fee schedules are placed in the context of the wider franchise contract. The fieldwork covers 19 case studies of UK franchising systems.

The thesis contains a predictive theory of franchising. This identifies initial investments which franchisees undertake as hostages with screening and bonding properties for the franchisor. These hostages influence monitoring costs. The thesis makes an operational, use of modern transaction-cost ideas