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Who should own it? An agency‐based explanation for multi‐outlet ownership and co‐location in plural form franchising

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  • Alexa A. Perryman
  • James G. Combs

Abstract

Plural forms exist when managers use two owners to perform one activity. Franchising is a plural form explained by agency theory, however, the theory is unable to explain two franchisor actions: 1) allowing franchisees to own multiple outlets and 2) co‐locating company‐owned and franchised outlets. We use research that describes a symbiosis between company‐owned and franchised outlets to extend agency theory and explain these actions. Our investigation of ownership patterns among 4,339 outlets of 16 plural form franchisors is consistent with our theory that multi‐outlet franchising is cost efficient and that co‐location occurs when franchisors fill market gaps left by franchisees. Copyright © 2011 John Wiley & Sons, Ltd.

Suggested Citation

  • Alexa A. Perryman & James G. Combs, 2012. "Who should own it? An agency‐based explanation for multi‐outlet ownership and co‐location in plural form franchising," Strategic Management Journal, Wiley Blackwell, vol. 33(4), pages 368-386, April.
    • Handle: RePEc:bla:stratm:v:33:y:2012:i:4:p:368-386
    DOI: 10.1002/smj.1947
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    Cited by:

    1. Vivian Zheng, Xu & Jenny Ji, Li & Su, Chenting, 2020. "Mitigating the Negative Effects of Regional Clustering in Franchising: The Roles of Governance Mechanisms," Journal of Retailing, Elsevier, vol. 96(3), pages 434-444.
    2. Freiwald, Nisa E. & Juranek, Steffen & Walz, Uwe, 2020. "On the economic geography of dual distribution — The case of McDonald’s in Germany," Economics Letters, Elsevier, vol. 191(C).
    3. Alessandro Giudici & James G. Combs & Benedetto Lorenzo Cannatelli & Brett R. Smith, 2020. "Successful Scaling in Social Franchising: The Case of Impact Hub," Entrepreneurship Theory and Practice, , vol. 44(2), pages 288-314, March.
    4. Sunkee Lee & Philipp Meyer-Doyle, 2017. "How Performance Incentives Shape Individual Exploration and Exploitation: Evidence from Microdata," Organization Science, INFORMS, vol. 28(1), pages 19-38, February.
    5. Daphne W. Yiu & William P. Wan & Kelly Xing Chen & Xiaocong Tian, 2022. "Public sentiment is everything: Host-country public sentiment toward home country and acquisition ownership during institutional transition," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(6), pages 1202-1227, August.
    6. Jung Hwan Koh & Christian Rojas, 2022. "Multi‐unit ownership and market power: A study of the lodging industry in Texas," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 4087-4105, December.
    7. Isabelle Piot-Lepetit & Rozenn Perrigot & Gérard Cliquet, 2014. "Organizational form and efficiency of franchise chains," Post-Print halshs-01023719, HAL.
    8. Magali Chaudey & Muriel Fadairo & Frédéric Perdreau, 2020. "Do retailers benefit from network affiliation in all locations," Economics Bulletin, AccessEcon, vol. 40(2), pages 1623-1633.
    9. Boulay, Jacques & Caemmerer, Barbara & Evanschitzky, Heiner & Duniach, Krista, 2020. "Multi-unit franchising from franchisor and franchisee perspectives: Antecedents, performance outcomes, and the optimal mini-chain size," Journal of Business Research, Elsevier, vol. 113(C), pages 49-58.
    10. Yu Lu, 2017. "Seeking Finance, Perceived Financial Constraints and R&D Engagement," Post-Print hal-02559421, HAL.
    11. Hyun‐Soo Woo & Albert Cannella & Luiz Mesquita, 2019. "How intra‐ and interfirm agglomeration affect new‐unit geographic distance decisions of multiunit firms," Strategic Management Journal, Wiley Blackwell, vol. 40(11), pages 1757-1790, November.
    12. Kretinin, Andrey & Anokhin, Sergey & Wincent, Joakim, 2020. "Exploring the antecedents of franchise internationalization," Journal of Business Research, Elsevier, vol. 112(C), pages 422-430.
    13. Gillis, William E. & Combs, James G. & Yin, Xiaoli, 2020. "Franchise management capabilities and franchisor performance under alternative franchise ownership strategies," Journal of Business Venturing, Elsevier, vol. 35(1).

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