Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Determinants of firm size in the franchise distribution system Empirical evidence from the Spanish market

Determinants of firm size in the franchise distribution system Empirical evidence from the... Purpose – The purpose of this paper is to examine three strategic decisions that determine firm size in the franchise distribution system: price policy, the timing decision, and network ownership. Design/methodology/approach – The paper uses data covering 384 franchise chains operating in the catering and fashion retailing sectors for an 18‐year period (from 1986 to 2004). The panel data methodology is applied. Findings – The paper finds that the pricing policy and the ownership structure can be used to attract new franchisees and it also finds empirical evidence of the advantages of early followers. Some differences are found between the two sectors analysed. Additionally, it finds evidence of the use of different strategies by mature and young franchise chains. Research limitations/implications – The focus is only on the fashion and catering sectors in the franchise industry. Although they are the two most important sectors in the Spanish market, this limitation provides researchers with interesting possibilities for further research in other countries and in other sectors. Practical implications – The results may help franchisors to know which strategies can increase their system size. First, franchisors should focus on minimizing their control of the network strategy. Second, franchisors should increase the franchise fee and the royalties as the chain matures to expand their system size. Third, managers who are planning to begin to franchise their businesses should decide to enter at the growth stage of the franchise market in order to achieve greater advantages. Originality/value – This paper highlights the importance of the price strategy and of the entry timing decision in the franchising context in countries where the franchise system is still developing. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png European Journal of Marketing Emerald Publishing

Determinants of firm size in the franchise distribution system Empirical evidence from the Spanish market

Download PDF
21 pages

Loading next page...
 
/lp/emerald-publishing/determinants-of-firm-size-in-the-franchise-distribution-system-jfx40qBHUQ
Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
0309-0566
DOI
10.1108/03090561111095649
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to examine three strategic decisions that determine firm size in the franchise distribution system: price policy, the timing decision, and network ownership. Design/methodology/approach – The paper uses data covering 384 franchise chains operating in the catering and fashion retailing sectors for an 18‐year period (from 1986 to 2004). The panel data methodology is applied. Findings – The paper finds that the pricing policy and the ownership structure can be used to attract new franchisees and it also finds empirical evidence of the advantages of early followers. Some differences are found between the two sectors analysed. Additionally, it finds evidence of the use of different strategies by mature and young franchise chains. Research limitations/implications – The focus is only on the fashion and catering sectors in the franchise industry. Although they are the two most important sectors in the Spanish market, this limitation provides researchers with interesting possibilities for further research in other countries and in other sectors. Practical implications – The results may help franchisors to know which strategies can increase their system size. First, franchisors should focus on minimizing their control of the network strategy. Second, franchisors should increase the franchise fee and the royalties as the chain matures to expand their system size. Third, managers who are planning to begin to franchise their businesses should decide to enter at the growth stage of the franchise market in order to achieve greater advantages. Originality/value – This paper highlights the importance of the price strategy and of the entry timing decision in the franchising context in countries where the franchise system is still developing.

Journal

European Journal of Marketing – Emerald Publishing

Published: Feb 15, 2011

Keywords: Pricing policy; Franchising; Distribution management; Spain

References

  • Contractual arrangements in franchising: an empirical investigation
    Agarwal, R.; Lal, R.
  • The use of franchising by US‐based retailers
    Alon, I.
  • Service pricing: an empirical investigation
    Avlonitis, G.J.; Indounas, K.A.
  • A new product growth for consumer durables
    Bass, F.M.
  • A comparison of franchise and independent small business survival rates
    Bates, T.
  • Deconstructing the pioneer's advantage: examining vintage effects and consumer valuations of quality and variety
    Bohlmann, J.; Golder, P.; Mitra, D.
  • Sustainable pioneering advantage? Profit implications of market entry order
    Boulding, W.; Christen, M.
  • Using the plural form in the management of restaurants chains
    Bradach, J.L.
  • Royalty rates and upfront fees in share contracts: evidence from franchising
    Brickley, J.A.
  • The choice of organizational form: the case of franchising
    Brickley, J.A.; Dark, F.H.
  • An agency perspective on franchising
    Brickley, J.A.; Weisbach, M.S.
  • Franchising as a plural system: a risk‐based explanation
    Bürkle, T.; Posselt, T.
  • Reflections on consumer preference formation and pioneering advantage
    Carpenter, G.S.; Nakamoto, K.
  • Innovation management within the plural form network
    Cliquet, G.; Nguyen, M.N.
  • Applied Multiple Regression/Correlation Analysis for the Behavioral Sciences
    Cohen, J.; Cohen, P.
  • Franchisor strategy: a proposed model and empirical rest of franchise versus company ownership
    Combs, J.G.; Castrogiovanni, G.J.
  • Why do firms use franchising as an entrepreneurial strategy? A meta‐analysis
    Combs, J.G.; Ketchen, D.J.
  • Franchising: a review and avenues to greater theoretical diversity
    Combs, J.G.; Michael, S.C.; Castrogiovanni, G.J.
  • Ownership decisions in plural contractual systems. Twelve networks from the quick service restaurant industry
    Dahlstrom, R.; Nygaard, A.
  • A futuristic research agenda for the field of franchising
    Dant, R.P.
  • Structural and strategic dynamics in franchising
    Dant, R.P.; Kaufmann, K.J.
  • Advertising fee in business‐format franchising
    Desai, P.S.
  • Externality and organizational choice in franchising
    Dnes, A.; Garoupa, N.
  • The internationalization of retailing: factors influencing the choice of franchising as a market entry strategy
    Doherty, A.M.
  • Market and partner selection processes in international retail franchising
    Doherty, A.M.
  • Power and control in international retail franchising
    Doherty, A.M.; Alexander, N.
  • International retail franchising: an agency perspective
    Doherty, A.M.; Quinn, B.
  • An analysis of quality management in franchise systems
    Fernández Monroy, M.; Melián Alzola, L.
  • Dual distribution and royalty fees in franchising
    Gallini, N.; Lutz, N.
  • Understanding the determinants of retail strategy: an empirical analysis
    Gauri, D.; Trivedi, M.; Grewal, D.
  • The market valuation of internet channel additions
    Geyskens, I.; Gielens, K.; Dekimpe, M.G.
  • Do international entry decisions of retail chains matter in the long run?
    Gielens, K.; Dekimpe, M.G.
  • Customer experience management in retailing: an organizing framework
    Grewal, D.; Levy, M.; Kumar, V.
  • Are there first‐mover advantages in b2b ecommerce technologies?
    Hidding, G.; Williams, J.R.
  • An empirical analysis of the benefits and limitations of restaurant franchisees
    Hing, N.
  • Opportunity and constraint: organizations learning from the operating and competitive experience of industries
    Ingram, P.; Baum, J.
  • Franchising, ownership and experience: a study of pizza restaurant survival
    Kalnis, A.; Meyer, K.J.
  • Agency theory and franchising: some empirical results
    Lafontaine, F.
  • Contractual arrangement as signaling devices: evidence from franchising
    Lafontaine, F.
  • Franchising vs corporate ownership: the effect on price dispersion
    Lafontaine, F.
  • The evolution of ownership patterns in franchise systems
    Lafontaine, F.; Kaufmann, P.
  • Targeting managerial control: evidence from franchising
    Lafontaine, F.; Shaw, K.L.
  • Retail contracting: theory and practice
    Lafontaine, F.; Slade, M.E.
  • Emerging trends in retail pricing practice: implications for research
    Levy, M.; Grewal, D.; Kopalle, P.; Hess, J.
  • First‐mover advantages in regimes of weak appropriability: the case of financial services innovations
    López, L.E.; Roberts, E.B.
  • Determination of adopter categories by using innovation diffusion models
    Mahajan, V.; Muller, E.; Srivastava, R.K.
  • Collinearity, power, and interpretation of the multiple regression analysis
    Mason, C.H.; Perreault, W.D. Jr
  • The economics of the franchise contracts
    Mathewson, G.F.; Winter, R.A.
  • First mover advantage through franchising
    Michael, S.C.
  • An empirical look at franchising as an organizational form
    Norton, S.W.
  • Dual distribution and royalty rates in franchised chains. An empirical analysis using French data
    Pénard, T.; Raynaud, E.; Saussier, S.
  • Discovering hidden pricing power
    Potter, D.V.
  • International retail franchising: a conceptual framework
    Quinn, B.; Alexander, N.
  • Why are royalty rates higher in service‐type franchises?
    Rao, R.; Srinivasan, S.
  • Order and scale of market entry, firm resources and performance
    Rodriguez‐Pinto, J.; Gutiérrez‐Cillán, J.; Rodríguez‐Escudero, A.I.
  • Entry into turbulent business networks. The case of a western company on the Estonian market
    Salmi, A.
  • Franchising vs company ownership as a decision variable of the firm
    Scott, F.A.
  • The use of initial fees and royalties in business‐format franchising
    Sen, K.C.
  • Why franchise companies expand overseas?
    Shane, S.
  • Making new franchise system work
    Shane, S.
  • Organizational incentives and organizational mortality
    Shane, S.
  • New firm survival: institutional explanations for new franchisor mortality
    Shane, S.; Foo, M.D.
  • The effects of new franchisors partnering strategies on franchise system size
    Shane, S.; Shankar, V.; Aravidakshan, A.
  • Finding the right mix: organizational learning, plural forms and franchise performance
    Sorenson, O.; Sorensen, J.B.
  • Spanish Franchise Systems
    Spanish Franchisor Association
  • Spanish Franchisors Register
    Spanish Franchisors Register
  • Concept uniformity: control versus freedom in business format franchising
    Streed, O.; Cliquet, G.
  • Up‐front franchise fees and ongoing variable payments as substitutes: an agency perspective
    Vázquez, L.
  • Franchising, retailing and e‐commerce
    Watson, A.; Kirby, D.A.; Egan, J.
  • Retail franchising: an intellectual capital perspective
    Watson, A.; Stanworth, J.; Healeas, S.; Purdy, D.; Stanworth, C.
  • Structuring corporate headquarters: an investigation of franchising
    Yang, J.; Castrogiovanni, G.J.; Justis, R.