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The Economics of Franchising [Paperback]

Roger D. Blair , Francine Lafontaine

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Book Description

Dec 31 2010 0521775892 978-0521775892 Reissue
This book describes in much detail both how and why franchising works. It also analyses the economic tensions that contribute to conflict in the franchisor-frnachisee relationship. The treatment includes a great deal of empirical evidence on franchising, its importance in various segments of the economy, the terms of franchise contracts, and what we know about how all these have evolved over time, especially in the U.S. market. A good many myths are dispelled in the process. The economic analysis of the franchisor-franchisee relationship begins with the observation that for franchisors, franchising is a contractual alternative to vertical integration. Subsequently, the tensions that arise between a franchisor and its franchisees, who in fact are owners of independent businesses, are examined in turn. In particular the authors discuss issues related to product quality control, tying arrangements, pricing, location and territories, advertising, and termination and renewals.

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"In The Economics of Franchising, Blair and Lafontaine have provided an exceptionally comprehensive and cogent treatment of franchise law and economics. They have made complex economic analysis accessible and at the same time have revealed the hidden complexity behind some of the naive misconceptions associated with franchising. But what I liked best was their ability to treat each topic with a blend of managerially relevent discussion and formal analysis. It is a book that will appeal to anyone with a business, legal or research interest in franchising." - Patrick Kaufmann, Boston University

"A book on franchising by the experts in this field is a welcome addition. It will be extremely valuable for both teachers and researchers." - Jeffrey M. Perloff, University of California, Berkeley

"Blair and Lafontaine have produced the definitive work on franchising arrangements, a detailed theoretical and empirical analysis that provides fundamental insight not only into the economic relationship between a franchiser and its franchisees but into vertical contractual relationships more generally. The rigorous documentation of how particular terms in the franchise contract solve inherent economic tensions in the relationship is an extremely valuable contribution to our knowledge of how franchising contracts, as well as business arrangements more generally, work." - Benjamin Klein, UCLA

"This superb book will become the standard reference for understanding the economics of franchising. Extending their previous research, these outstanding scholars assemble new data sets to establish basic facts and explode several pervasive myths about franchising. How fast is the already significant amount of franchising growing? Are franchisees more likely to succeed than independent businesses? What are the typical terms of a franchisee's contract and why? The authors answer these and other fascinating questions with a keen economic intuition and with precision. The book is a must reading for students of industrial organization and contracting." - Dennis W. Carlton, University of Chicago

Book Description

This book describes in much detail both how and why franchising works. It also analyses the economic tensions that contribute to conflict in teh franchisor-franchisee relationship. The book includes a great deal of empirical evidence on franchising not available anywhere else.

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Most Helpful Customer Reviews on (beta) 4.5 out of 5 stars  2 reviews
9 of 9 people found the following review helpful
4.0 out of 5 stars Valuable Tool for Franchisor Business Planning June 12 2006
By Stephen C. Long - Published on
Format:Hardcover|Verified Purchase
The U.S. Government quit collecting data on franchising in 1986. The franchise industry has, for the most part, done a poor job of collecting good data. Blair and Lafontaine collect the data, such as it is, which has been reliably produced on franchising since 1986 and reveal four prevalent myths in franchising. Data are available for all franchisors and are also segmented among industries.

This book will be helpful for the person in a new franchisor operation responsible for creating the economic model, i.e., the initial franchise fee, royalty fees and advertising fees. The book won't be much help without a background of college-level introductory macro- and microeconomics. A basic knowledge of calculus will enable you to follow the analyses but isn't critical to understanding the conclusions. The book also critically analyzes the economic issues which impact franchisor-franchisee tensions.
1 of 1 people found the following review helpful
5.0 out of 5 stars The Only Real Academic Treatment of Franchising April 8 2011
By Shane - Published on
After digging around a lot, I've found that this is the only good academic treatment of the economics of franchising. It is very well written and is of adequate complexity to interest economists while also being simple enough for anybody to understand. It is both a positive and a normative study. The authors have some of the most comprehensive data available about what franchises do, as well as interesting conversation about what they should do. I have the utmost respect for the authors, and I recommend this book to anybody who has an interest in the topic.

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