Markets: State Franchise Laws, Dealer Terminations, and the Auto Crisis

Lafontaine, Francine; Morton, Fiona Scott

doi:10.1257/jep.24.3.233

Cited by 37 publications

(25 citation statements)

References 14 publications

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“…Past research has found higher prices in franchised than in company-owned outlets (Lafontaine 1999;Lafontaine and Scott Morton 2010;Ater and Rigbi 2015) because they are able to set monopolistic prices when granted exclusive territories. That is, franchise chains are characterized by a Bsuccessive monopoly^market structure (i.e., there is market power at both the production and distribution stages).…”

Section: Pricingmentioning

confidence: 99%

Antecedents of early terminations in franchising: franchisor versus franchisee cancelations

López-Fernández

López‐Bayón

2017

Small Bus Econ

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Franchisors capitalize on franchisee entrepreneurial capacity to grow. However, enabling franchisees to develop their ventures may damage system consistency. This dilemma makes conflict particularly prevalent in the field of franchising. Nevertheless, prior research has reported an incomplete picture of factors leading to serious disagreement and premature termination in franchise partnerships. We address this gap, first, by adding the entrepreneurial autonomy of franchisees as a relevant but underexplored source of conflict and, second, by providing a more fine-grained analysis of franchisors' versus franchisees' drivers of termination. Specifically, we focus on the controversial issues of pricing and local advertising policies and analyze how expanding franchisees' entrepreneurial autonomy in these decision areas is related to contract terminations depending on who ended the relationship (the franchisor or a franchisee). The study also highlights less controversial requirements and conditions (e.g., upfront investments, franchisor experience …) that may reduce early terminations. Our empirical objectives are met by using survey data from a sample of franchisor companies. The results show how the performance outcomes of entrepreneurial autonomy differ depending on the decision area in which it is exercised. Results also throw light on the consequences of various critical franchise policies that may be masked if both types of termination (franchisors vs. franchisees) are considered together.

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Section: Pricingmentioning

confidence: 99%

Antecedents of early terminations in franchising: franchisor versus franchisee cancelations

López-Fernández

López‐Bayón

2017

Small Bus Econ

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“…A General Motors, por exemplo, em 1898 passa a utilizar revendedores independentes para expansão de seus postos de venda (LAFONTAINE; MORTON, 2010 mil unidades nos mais diversos segmentos do varejo, alimentação, instrução, dentre outros. O setor gera quase 800 mil empregos diretos.…”

Section: Breve Histórico Do Setorunclassified

“…A produção, entretanto, ocorre no ponto de venda como é o caso de redes de fast-food, por exemplo (LAFONTAINE;SLADE, 1996). Tais arranjos apresentam alto grau de padronização e, muitas vezes, são considerados os verdadeiros exemplos de franchising por economistas (KLEIN, 1995) 2 .…”

Section: Arranjo Típico De Franquiaunclassified

“…Algumas destas vertentes abordam a relação entre produtores e varejistas e se baseiam na ideia de que resultados first-best irrestritos não podem ser alcançados devido à presença de custos de coordenação no arranjo (LAFONTAINE;SLADE, 1996). Tais custos estão relacionados com monitoramento do esforço do agente contratado, incentivos ao desempenho, desenho e obrigação de contratos.…”

Section: Revisão Da Literaturaunclassified

“…Dentre os mais recorrentes objetos de estudo nesta vertente teórica estão os determinantes da proporção entre lojas próprias e franqueadas (BRADACH, 1997, LAFONTAINE;SHAW, 2005), o equilíbrio entre taxas fixas e variáveis em acordos de franquia (BRICKLEY, 2002;VASQUEZ, 2005;MARUYAMA;YAMASHITA, 2008), custos de monitoramento (PENÁRD et al, 2003), controle do oportunismo de franqueados (CHAUDEY; FADAIRO, 2008;BOULAY, 2010), dentre outros.…”

Section: Introductionunclassified

See 2 more Smart Citations

Fatores determinantes do crescimento de redes de franquia no Brasil.

Bitti¹

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Formula Pricing and Profit Sharing in Inter‐Firm Contracts

Blair

Lafontaine

2014

Manage Decis Econ

Self Cite

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Ronald Coase viewed transaction cost minimization as a central goal of contracting and organizational decisions. We discuss how a solution to the traditional successive monopoly problem that has not been discussed in the literature can economize on such costs. Specifically, we show that when we allow for profit sharing between upstream and downstream firms, a simple formula pricing contract can be used to generate the vertically integrated level of profits. This simple contract, empirically, would take the form of the standard linear wholesale price contracts that are ubiquitous in vertical contexts, even those where we might expect successive monopoly to be an issue. We discuss the advantages of the proposed contract from a transaction cost perspective. We also discuss some of its limitations, in particular the likelihood of misrepresentation of costs, and ways in which such misrepresentation might be addressed in the contract.

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Markets: State Franchise Laws, Dealer Terminations, and the Auto Crisis

Cited by 37 publications

References 14 publications

Antecedents of early terminations in franchising: franchisor versus franchisee cancelations

Antecedents of early terminations in franchising: franchisor versus franchisee cancelations

Fatores determinantes do crescimento de redes de franquia no Brasil.

Formula Pricing and Profit Sharing in Inter‐Firm Contracts

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