Article: The economic impact of location on multi-unit franchising Journal: European Journal of International Management (EJIM) 2024 Vol.24 No.3/4 pp.440 - 453 Abstract: One of the most common forms of franchising is Multi-Unit Franchising (MUF), which is the primary growth vehicle for franchising worldwide. MUF is a governance form inside franchising networks where the franchisor bestows the franchisee the right to own and operate more than one outlet. Many of these franchises are small businesses that face several problems, such as the lack of access to capital for growth. Based on agency theory, we address the impact of geographical dispersion of the franchised units to headquarters, agglomeration of franchise stores, incentive mechanisms and monitoring on the proportion of multi-unit franchising in the chain. Using a unique cross-sectional Brazilian data set, we found a positive relationship between the proportion of MUF and the variables, in agreement with agency theory. Implications for small businesses, franchising and the economy are discussed. Inderscience Publishers - linking academia, business and industry through research

Title: The economic impact of location on multi-unit franchising

Authors: Cintya Lanchimba; Eugenio Jose Silva Bitti; Dianne H.B. Welsh

Addresses: Departamento de Economía Cuantitativa, Facultad de Ciencias, Escuela Politécnica Nacional, Quito, Ecuador; Institut de Recherche en Gestion et Economie, Université de Savoie Mont Blanc (IREGE/IAE Savoie Mont Blanc), Chambéry, Savoie, Annecy, France ' Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto, Universidade de São Paulo (Ribeirão Preto), São Paulo, Brazil ' Bryan School of Business & Economics, University of North Carolina (Greensboro), Greensboro, North Carolina, USA

Abstract: One of the most common forms of franchising is Multi-Unit Franchising (MUF), which is the primary growth vehicle for franchising worldwide. MUF is a governance form inside franchising networks where the franchisor bestows the franchisee the right to own and operate more than one outlet. Many of these franchises are small businesses that face several problems, such as the lack of access to capital for growth. Based on agency theory, we address the impact of geographical dispersion of the franchised units to headquarters, agglomeration of franchise stores, incentive mechanisms and monitoring on the proportion of multi-unit franchising in the chain. Using a unique cross-sectional Brazilian data set, we found a positive relationship between the proportion of MUF and the variables, in agreement with agency theory. Implications for small businesses, franchising and the economy are discussed.

Keywords: multi-unit franchising; location; agency theory; Brazil; Geographic dispersion; agglomeration of franchise stores; incentive mechanisms; franchise monitoring; franchise growth; franchise incentive systems.

DOI: 10.1504/EJIM.2024.141659

European Journal of International Management, 2024 Vol.24 No.3/4, pp.440 - 453

Received: 08 Mar 2022
Accepted: 18 Sep 2022
Published online: 30 Sep 2024 *

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Title: The economic impact of location on multi-unit franchising

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