This article shows that the higher the problems of hold-up and free-riding in franchise systems, the higher the probability that the franchisor will provide franchisees with territorial exclusivity. It therefore appears that territorial exclusivity is an assurance from a franchisor that the...

This article provides evidence on the determinants of the ongoing variable payments used in Portuguese and Spanish franchise systems. Consistent with the Two-Sided Moral Hazard Model, the ongoing variable payments decrease as the costs of monitoring franchisees' efforts rise. The results also...

This article studies, from an agency perspective, the factors that explain the franchisor decision to integrate versus franchise its outlets. The analysis of a sample of Spanish franchise networks shows that franchising is more likely when: a) the costs of inefficient risk allocation between...

This article provides evidence on the determinants of the compensation arrangements used in franchise relationships. While the empirical literature has studied two of these compensation arrangements – the royalty rate and the up-front franchise fee – this work expands the analysis to another...