Is franchising a capital structure issue?

Is franchising a capital structure issue? This paper reviews recent research on franchising and capital structure. Several key variables that affect capital costs and are common to franchised businesses are identified. The question whether or not franchising exists because franchisees provide capital that has no close substitutes for pioneering entrepreneurs is explored and criticized because alternatives to franchisees' funds are readily available and not used by franchisers. The role of franchisee financing is also examined as a key feature of capital structure in these types of industries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Corporate Finance Elsevier

Is franchising a capital structure issue?

Journal of Corporate Finance, Volume 2 (1) – Oct 1, 1995

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Publisher
Elsevier
Copyright
Copyright © 1995 Elsevier Ltd
ISSN
0929-1199
DOI
10.1016/0929-1199(95)00005-S
Publisher site
See Article on Publisher Site

Abstract

This paper reviews recent research on franchising and capital structure. Several key variables that affect capital costs and are common to franchised businesses are identified. The question whether or not franchising exists because franchisees provide capital that has no close substitutes for pioneering entrepreneurs is explored and criticized because alternatives to franchisees' funds are readily available and not used by franchisers. The role of franchisee financing is also examined as a key feature of capital structure in these types of industries.

Journal

Journal of Corporate FinanceElsevier

Published: Oct 1, 1995

References

  • Corporate control and the choice of investment financing: The case of corporate acquisitions
    Amihud, Y.; Lev, B.; Travlos, N.G.
  • On the existence of an optimal capital structure: Theory and evidence
    Bradley, M.; Jarrell, G.; Kim, E.H.
  • Efficient financing under asymmetric information
    Brennan, M.; Kraus, A.
  • Vertical integration in franchise systems: Agency theory and resource explanations
    Carney, M.; Gedajlovic, E.
  • The nature of the firm
    Coase, R.H.
  • Capital structure and the informational role of debt
    Harris, M.; Raviv, A.
  • The theory of capital structure
    Harris, M.; Raviv, A.
  • Stock price movements in response to stock issues under asymmetric information
    Krasker, W.
  • Portfolio selection
    Markowitz, H.M.
  • Corporate finance and corporate governance
    Williamson, O.

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