Contractual restraints and performance in franchise networks

Hajdini, Ina; Windsperger, Josef

doi:10.1016/j.indmarman.2019.02.011

Cited by 23 publications

(11 citation statements)

References 91 publications

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“…Short et al (2018) found uniqueness in the number of franchise businesses registered by military veterans with insights on entrepreneurship with the concept of franchising. Discipline and perseverance in applying the concept of franchising were also found by Hajdini and Windsperger (2019). It confirms that the franchise business requires control in implementing work contracts, including transactions, exclusive territories, managerial, and binding contract agreements.…”

Section: Introductionmentioning

confidence: 56%

Local brand franchise competition in the disruption era

Subawa

Widhiasthini

Permatasari

2020

IJPQM

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Local brand franchise business, particularly culinary, has been rapidly developed in this disruption era. This is in line with the society's need for delicious but affordable culinary. There is a comprehensive relation-blend of cultural, business, and lifestyle responses. This research examined the factors affecting local brand franchises in the business competition in the disruption era. Using a descriptive qualitative method, the results indicated that local brand franchises are a part of economic disruption, because they create an entirely new market, providing high-quality products at lower prices. In this disruption era, local brand franchises are limited by binding agreements on franchising, courage in creativity and innovation, responsive to instant culture, adaptive to changes in consumer lifestyle, multi-level hegemony, and capitalism.

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Section: Introductionmentioning

confidence: 56%

Local brand franchise competition in the disruption era

Subawa

Widhiasthini

Permatasari

2020

IJPQM

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“…At a conceptual level, Schilke and Lumineau (2018) examined how contract clauses of different dimensions influence business relationship outcomes, such as trust and conflict. Empirical studies on contract clauses are typically conducted through surveys by asking whether the contracts contain these clauses or not (Hajdini and Windsperger 2019). In our research, we take this one step forward and ask if the relationship, represented by the presence of series of successive contracts, affects the contract length.…”

Section: Literature Reviewmentioning

confidence: 99%

Contract Length Determination in the B2B Service Industry: Role of Economic Factors, Business Relationship, and Learning

Feng

Krishnan

2021

Journal of Service Research

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In B2B markets, when firms sign contracts for transactions pertaining to the exchange of services that are delivered over a period of time, one critical decision they make is the length (or duration) of the contract. If the services are hired for a long project, companies often sign multiple, successively run contracts with the same vendor. This is prevalent in projects such as when multinational companies hire consulting firms like Accenture to streamline and digitize their business processes, when big banks in developing countries hire firms like Tata Consultancy Services to extend banking facilities into rural markets, and when oil companies hire rig firms to drill oil wells. From a traditional economic perspective, companies would decide on an optimal contract length that is not too long or too short; the former disables the firms from reacting to market changes while the latter makes negotiation costs expensive. However, when a company signs a series of successive contracts with a service-firm, both companies get to learn about the other company’s goals and operations dynamically, which might influence the length of each contract in the series. Thus, determining the contract length in a series of successive contracts is more challenging. In this study, we build a contract length determination model that considers both the economic factors and the dynamic learning. The model provides managers with a theoretical yet practical tool to make optimal decisions on contract length. We use data from the oil-drilling industry to empirically test the proposed model.

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“…Third, future research can extend this work by focusing on possible interactions between call option rights and other contract clauses, such as resale price maintenance, tying arrangement or lease control. The bundling of contractual rights may lead to new results for the theory and practice of contract design (Hajdini and Raha 2018;Hajdini and Windsperger 2019;Schepker et al 2014). Finally, future studies could investigate the antecedents of the use of ROC in different international franchise governance modes (such as joint venture franchising and master franchising franchising) (Konigsberg 2008;Jell-Ojobor and Windsperger 2014), since strategic flexibility is very important for the success of international franchise networks in highly uncertain international environments, for instance due to institutional and economic uncertainty.…”

Section: Limitations and Future Researchmentioning

confidence: 99%

Real options in franchise contracting: an application of transaction cost and real options theory

Hajdini

Windsperger

2020

Eur J Law Econ

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Previous research has not explained the use of real option clause in franchise contracting. The real option clause has two economic functions: To reduce transaction costs by mitigating opportunism risk and to increase strategic rents by exploiting the profit potential from future upside opportunities under uncertainty. We argue that franchisors will more likely use a real option clause (ROC) in franchise contracts under high behavioral uncertainty, high franchisors’ transaction-specific investments relative to franchisees’ and long contract duration. In addition, by combining transaction cost theory and real option theory, our study provides a new explanation for the impact of environmental uncertainty on the use of ROC in franchise networks by showing that there exists a U-shaped relationship between environmental uncertainty and the franchisor’s use of ROC. Overall, the data from German and Swiss franchise systems provide support of the research model.

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Contractual restraints and performance in franchise networks

Cited by 23 publications

References 91 publications

Local brand franchise competition in the disruption era

Local brand franchise competition in the disruption era

Contract Length Determination in the B2B Service Industry: Role of Economic Factors, Business Relationship, and Learning

Real options in franchise contracting: an application of transaction cost and real options theory

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