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An analysis of UK franchise contracting 1989-1999

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  • Jonathan S. Seaton

    (Department of Economics, Loughborough University, Loughborough, Leicestershire, LE113 TU, UK)

Abstract

This paper examines UK franchise contracts over the period 1989-1999. Franchising is modelled as comprising three main variables, contract length, royalty rate and initial franchise fee. Up to now most authors have concentrated on the latter two variables, but with the data in this paper it is possible to assess the characteristics that impact on all three. Further, our analysis looks at what affects the probability of contract change. We take account of the limited dependent variable nature of the data and exploit sectoral heterogeneity. Our main findings are that the focus of attention on 'aggregate' variables is inappropriate and that contract length appears to be an important aspect of the franchise contract which is theoretically obvious, but until now has not been empirically tested. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • Jonathan S. Seaton, 2003. "An analysis of UK franchise contracting 1989-1999," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(1), pages 25-34.
    • Handle: RePEc:wly:mgtdec:v:24:y:2003:i:1:p:25-34
    DOI: 10.1002/mde.1102
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    References listed on IDEAS

    as
    1. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    2. Francine Lafontaine & Kathryn L. Shaw, 1999. "The Dynamics of Franchise Contracting: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 1041-1080, October.
    3. Norton, Seth W., 1995. "Is franchising a capital structure issue?," Journal of Corporate Finance, Elsevier, vol. 2(1-2), pages 75-101, October.
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