The growth and performance of franchise systems: Company versus franchisee ownership

Abstract

Theory has argued that there is a life cycle of development for franchise organizations that involves a growth in control and profitability of the company through a "managed" redistribution in the quality and quantity of company-owned establishments. This study tests these hypotheses using time series data (1969–1980) for 17 different business areas and a linear statistical model involving an interaction term. Although certain business areas exhibit behavior consistent with theory, there is no evidence that comprehensive ownership and/or performance differentials have emerged that favor company-owned establishments.