search query: @indexterm Franchising / total: 231
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| Author: | Brown, W. O. Jr. |
| Title: | Transaction costs, corporate hierarchies, and the theory of franchising |
| Journal: | Journal of Economic Behavior and Organization
1998 : AUG, VOL. 36:3, p. 319-329 |
| Index terms: | MANAGERS FRANCHISING THEORIES ORGANIZATIONAL BEHAVIOUR LABOUR SUPPLY MARKETS COSTS |
| Language: | eng |
| Abstract: | The paper provides a managerial-based explanation for franchising which predicts the existence of dual distribution and many commonly observed characteristics of franchise organizations. In this model employee managers working under a promotion-based system are more efficient than franchisees. However, there is necessarily a limit to the number of managers from lower level that can be effectively motivated under such a system. In some industries the economies of scale associated with brand names lead to a minimum efficient number of retail / production facilities that is larger than that can be supported by the promotion hierarchy. In these cases the firm's best alternative is to franchise. |
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