Effects of restaurant franchising: Does an optimal franchise proportion exist?

Hsu, Li-Tzang; Jang, SooCheong

doi:10.1016/j.ijhm.2008.07.002

Cited by 109 publications

(157 citation statements)

References 56 publications

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“…hospitality sector deserves a specific industry-level analysis about the relation between leverage and financial performance due to their industry-specific characteristics such as management contracts in hotels and franchising in hotels and restaurants. Madanoglu, Lee, and Catrogiovanni (2011), Hsu and Jang (2009), Srinivasan (2006, Combs and Ketchen (1999), and Alon (2001) found a negative relation between leverage and performance when they examine the effect of franchising on the financial performance of restaurants.…”

mentioning

confidence: 99%

The Impact of Leverage on Stock Returns in the Hospitality Sector: Evidence from the UK

Muradoğlu¹,

Sivaprasad²

2014

Tourism Analysis

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a relatively low level of operating inventories, it requires a relatively high level of capital for its real estate component. This component often includes buildings, operating systems, furniture, and restaurant equipment, and this ordinarily involves securing external financing to acquire these assets.This article addresses an important question regarding the relation between leverage and its effect on stock returns of firms in the hospitality sector. The nature of the industry is important when studying the leverage return relation. Arditti (1967) and Melicher (1974) argued that the true nature of leverage return relation can be disclosed only by testing this relation within industries. The THE IMPACT OF LEVERAGE ON STOCK RETURNS IN THE HOSPITALITY SECTOR: EVIDENCE FROM THE UKYAz GŰLNUR MURADOĞLU* AND SHEEJA SIVAPRASAD † *School of Business and Management, Queen Mary University, London, UK †Department of Accounting, Finance and Governance, University of Westminster, London, UK This article examines the relation between capital structure and abnormal returns for the UK hospitality sector by using an investment strategy based on hospitality firms' capital structure. We find that abnormal returns are higher, 0.53% per annum, for medium leverage hospitality firms, and it can be increased up to 0.91% by investing in medium leverage and low price-to-book value firms. The findings raise an important issue for the hospitality sector as the firms in this sector are continually aiming to raise external finance to fund expansion. This is a unique situation when compared to other sectors in the economy whereby investors earn higher abnormal returns when investing in low levered firms.

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mentioning

confidence: 99%

The Impact of Leverage on Stock Returns in the Hospitality Sector: Evidence from the UK

Muradoğlu¹,

Sivaprasad²

2014

Tourism Analysis

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“…Em tese, o franqueador atua como concessor de uma rede e o franqueado como um investidor, que devido ao caráter assimétrico, este último possui diminuto poder sobre as decisões da organização da franqueadora, embora os interesses de ganhos sejam mútuos e proporcionais ao sucesso -em termos de resultado financeiro -do empreendimento (BOTTI; BRIEC; CLIQUET, 2009;HSU;JANG, 2009;ALTI-NAY et al, 2014).…”

Section: Fundamentação Teórica 21 O Sistema De Franquiasunclassified

“…Diversos estudos (e.g., VANCE; FÁVERO; LUPPE, 2008;CARMO;JANG, 2009;ZILBER, 2010;BRONI;VELENTZAS, 2013;HSU;IOANNAA;MARIA, 2013;ALTINAY et al, 2014) enxergam a relação entre franqueador e franqueado como algo complexo, possuindo diversos benefícios e riscos, simultaneamente, para ambas as partes. Em consequência, segundo Kaufmann e Lawrence (2011), existem casos em que os franqueados de uma marca formam associações -semelhantes a sindicatos -, que visam defender os interesses dos franqueados perante o franqueador.…”

Section: Fundamentação Teórica 21 O Sistema De Franquiasunclassified

Custos Previstos versus Custos Reais: O Caso de uma Franquia de Fast-Foods

Lacerda¹,

Lima²,

Souza³

2015

RECFin

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RESUMONo que diz respeito às franquias, muito se tem discutido sobre o aparato mercadológico e contábil que envolve a relação entre franqueadores e franqueados, em especial, ao que trata da rentabilidade. Diante da necessidade de novas contribuições para o tema, este estudo teve por objetivo investigar uma franquia do ramo de fast-foods quanto à compatibilidade entre o custo dos produtos previsto pelo franqueador -antes do início das operações comerciais -e o custo real dos produtos vendidos pelo franqueado -após o início das operações comerciais. Para tanto, foi realizada uma pesquisa em formato de estudo de caso, exploratória no modo como foi conduzida e descritiva no modo de aná-lise. Por meio de uma análise documental de dados secundários, coletados junto ao franqueado, constatou-se que a matriz (franqueador) estabelece um modelo de preço para os produtos com base unicamente no custo da matéria-prima utilizada na produção, negligenciando os demais fatores que influem diretamente na composição dos custos totais. De tal modo, compreende-se que o custo real praticado pelo franqueado é notadamente superior ao que fora inicialmente previsto pela franqueadora, o que afeta diretamente o ponto de equilíbrio da franquia analisada. Palavras-chave: Franquia. Custo real. Custo Previsto. Fast-foods. Ponto de equilíbrio.

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“…Secondly, the active use of franchising in geographically dispersed companies can also be explained by the resource dependence theory (Brickley, Dark, 1987;Carney, Gedajlovic, 1991;Combs, Ketchen, 1999;Lafontaine, Kaufmann, 1994;Norton, 1988;Sen, 1998;Oxenfeldt, Kelly, 1969;Hsu, Jang, 2009). According to this theory, a firm adopts the franchising strategy when it lacks the financial, human and/or information resources that are necessary for growth (Dant, Paswan, Kaufmann, 1996;Oxenfeldt, Kelly, 1969;Hsu, Jang, 2009;Roh, 2002).…”

Section: Maximization Of Financial Performancementioning

confidence: 99%

Franchising in Russia: does an optimal franchise proportion exist?

Nikulin¹,

Shatalov²

2013

AJBR

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The focus of this study is on the problem of finding the optimal balance between the number of company-owned and franchised outlets. We start with the factors that determine a company's propensity to franchise in the emerging market of Russia. Data on 46 companies of different industrial affiliations for 2010 were examined. It is revealed that the proportion of franchised units is positively correlated with the number of cities a company operates in and is negatively correlated with a company's size. In line with these findings, we also reveal that the hypothesis of a nonlinear relationship between the proportion of franchised outlets and a company's return on assets is also supported in the sample of organizations considered. Therefore, an increase in the proportion of franchised outlets over a certain limit is not appropriate for a firm. This result can be explained in terms of two major risks inherent in the franchising strategy that come into play as the franchise proportion of a company grows: the risk of brand disruption and the risk of losing business.

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Effects of restaurant franchising: Does an optimal franchise proportion exist?

Cited by 109 publications

References 56 publications

The Impact of Leverage on Stock Returns in the Hospitality Sector: Evidence from the UK

The Impact of Leverage on Stock Returns in the Hospitality Sector: Evidence from the UK

Custos Previstos versus Custos Reais: O Caso de uma Franquia de Fast-Foods

Franchising in Russia: does an optimal franchise proportion exist?

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