IDEAS home Printed from https://ideas.repec.org/p/cen/wpaper/94-3.html
   My bibliography  Save this paper

Firms Started As Franchises Have Lower Survival Rates Than Independent Small Business Startups

Author

Listed:
  • Timothy Bates

Abstract

Aspiring entrepreneurs choosing to become franchisees certainly expect to improve their chances of survival during the turbulent early years of business startup and operation. Alignment with a franchiser parent company offers the franchisee managerial assistance, access to financial capital, and access to markets via the right to utilize the parent company trademark. This study examines survival patterns among franchise and nonfranchise small firms started between 1984 and 1987: survival through late 1991 is tracked for all firms. Although the franchise operations are larger scale, better capitalized young firms, the independent business startups are found to be more profitable and their survival prospects are better than those of franchises.

Suggested Citation

  • Timothy Bates, 1994. "Firms Started As Franchises Have Lower Survival Rates Than Independent Small Business Startups," Working Papers 94-3, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:94-3
    as

    Download full text from publisher

    File URL: https://www2.census.gov/ces/wp/1994/CES-WP-94-03.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Evans, David S, 1987. "The Relationship between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 567-581, June.
    2. Norton, Seth W, 1988. "An Empirical Look at Franchising as an Organizational Form," The Journal of Business, University of Chicago Press, vol. 61(2), pages 197-218, April.
    3. Rubin, Paul H, 1978. "The Theory of the Firm and the Structure of the Franchise Contract," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 223-233, April.
    4. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    5. Alfred R Nucci, 1992. "The Characteristics of Business Owners Database," Working Papers 92-7, Center for Economic Studies, U.S. Census Bureau.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ollinger, Michael & Fernandez-Cornejo, Jorge, 1998. "Innovation and Regulation in the Pesticide Industry," Agricultural and Resource Economics Review, Cambridge University Press, vol. 27(1), pages 15-27, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bates, Timothy, 1998. "Survival patterns among newcomers to franchising," Journal of Business Venturing, Elsevier, vol. 13(2), pages 113-130, March.
    2. Williams, Darrell L., 1999. "Why do entrepreneurs become franchisees? an empirical analysis of organizational choice," Journal of Business Venturing, Elsevier, vol. 14(1), pages 103-124, January.
    3. Tikoo, Surinder, 1996. "Assessing the franchise option," Business Horizons, Elsevier, vol. 39(3), pages 78-82.
    4. Oznur Ozdamar & Eleftherios Giovanis & Sahizer Samuk, 2020. "State business relations and the dynamics of job flows in Egypt and Turkey," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(4), pages 519-558, December.
    5. Albert N. Link & John T. Scott, 2013. "Employment growth from public support of innovation in small firms," Chapters, in: Public Support of Innovation in Entrepreneurial Firms, chapter 3, pages 41-64, Edward Elgar Publishing.
    6. Agustí Segarra & Maria Callejón, 2002. "New Firms' Survival and Market Turbulence: New Evidence from Spain," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(1), pages 1-14, February.
    7. Timothy Bates, 1998. "Exiting Self-Employment: An Analysis of Asian Immigrant-Owned Small Businesses," Working Papers 98-13, Center for Economic Studies, U.S. Census Bureau.
    8. Viktoria Kocsis & Victoria Shestalova & Henry van der Wiel & Nick Zubanov & Ruslan Lukach & Bert Minne, 2009. "Relation entry, exit and productivity: an overview of recent theoretical and empirical literature," CPB Document 180.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    9. de Carvalho, Antonio Gledson, 2008. "The Effect of Size and Institutional Development on the Growth of Brazilian Firms," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 62(4), December.
    10. Engel, Dirk, 2002. "The Impact of Venture Capital on Firm Growth: An Empirical Investigation," ZEW Discussion Papers 02-02, ZEW - Leibniz Centre for European Economic Research.
    11. Botti, Laurent & Briec, Walter & Cliquet, Gérard, 2009. "Plural forms versus franchise and company-owned systems: A DEA approach of hotel chain performance," Omega, Elsevier, vol. 37(3), pages 566-578, June.
    12. Josep-Maria Arauzo-Carod & Agustí Segarra-Blasco, 2005. "The Determinants of Entry are not Independent of Start-up Size: Some Evidence from Spanish Manufacturing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(2), pages 147-165, September.
    13. Yang, Qing Gong & Temple, Paul, 2012. "Reform and competitive selection in China: An analysis of firm exits," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 286-299.
    14. González-Díaz, Manuel & Montoro-Sánchez, Ángeles, 2011. "Some lessons from incentive theory: Promoting quality in bus transport," Transport Policy, Elsevier, vol. 18(2), pages 299-306, March.
    15. Quader, Syed Manzur, 2017. "Differential effect of liquidity constraints on firm growth," Review of Financial Economics, Elsevier, vol. 32(C), pages 20-29.
    16. Peter Nunnenkamp & Hannes Öhler & Tillmann Schwörer, 2011. "US based NGOs in International Development Cooperation: Survival of the Fittest?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 83, Courant Research Centre PEG.
    17. Peter Cappelli & Monika Hamori, 2007. "Are Franchises Bad Employers?," NBER Working Papers 13327, National Bureau of Economic Research, Inc.
    18. Bruno Cassiman & Masako Ueda, 2006. "Optimal Project Rejection and New Firm Start-ups," Management Science, INFORMS, vol. 52(2), pages 262-275, February.
    19. Mark L.J. Wright & Esteban Rossi-Hansberg, 2004. "Firm Size Dynamics in the Aggregate Economy," 2004 Meeting Papers 878, Society for Economic Dynamics.
    20. Laurent Cavenaile & Pau Roldan-Blanco, 2021. "Advertising, Innovation, and Economic Growth," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(3), pages 251-303, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cen:wpaper:94-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dawn Anderson (email available below). General contact details of provider: https://edirc.repec.org/data/cesgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.