This article provides an empirical assessment of various agency-theoretic explanations for franchising, including risk sharing, one-sided moral hazard, and two-sided moral hazard. The empirical models use proxies for factors such as risk, moral hazard, and franchisors' need for capital to...

Franchisors simultaneously operate outlets under two distinct incentive schemes: franchising and company ownership. Using an extensive panel dataset, we show that experienced franchisors maintain a stable level of corporate ownership over time. However, the targeted rate of company ownership...

Using data on all restaurants opened in Texas between 1980 and 1995 by seven large U.S. fast-food chains, we examine the extent of multi-unit ownership among franchisees and analyze how franchisors allocate the ownership of new units. We show that franchisees with nearby units are much more...

Contractual arrangements involving revenue/profit sharing are often based on fairly simple, often linear, rules. In addition, in many contexts these contracts are not finely adjusted to the particular circumstances of individual agents or markets, nor do they vary over time to the extent current...