Company Ownership vs Franchising: Issues and Evidence

Uses comprehensive data on the geographical and industry distribution of company‐owned and franchised outlets in franchise chains to test hypotheses on the ownership fror choice in US state markets. Comfirms the importance of geographical factors, associating company ownership with urbanization and/or higher population densities, an therefore concluding that in these cases monitoring cost are lower. Concludes further that franchising supplement the financing of the chain and is particularly useful in achieving rapid growth.